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They’ve changed. They promise. 

To hear the San Francisco-based cryptocurrency exchange Coinbase tell it, they’ve turned over a new leaf. Sure, SEC documents revealed scores of customer complaints against them — ranging from allegations of fraud to negligence — but those were in the (very recent) past. These days, insists the company in a series of blog posts and statements to Mashable, Coinbase is a different animal.

But over the course of 2018 its customers have deluged the Better Business Bureau with complaints. Maybe they missed the memo?

The precursor to the Better Business Bureau was founded in 1912 by a Boston ad executive. The organization’s early form was the so-called National Vigilance Committee; their goal was to curb misleading advertising. Today, you may know the Better Business Bureau as the organization that rates businesses across the US and acts as a public clearing house for consumer complaints. It’s often the last recourse for people who feel they’ve been screwed over by a company but don’t have the resources to pursue legal action.

When it comes to Coinbase, the Bureau has received quite a few of those complaints — enough to give them an “F” rating based on “the total number of positive, neutral, and negative reviews posted.”

These complaints are recent. In contrast to the documents Mashable obtained following a FOIA of the SEC, the tales of poor customer service and frozen funds are not from the time of “unprecedented growth” as described by a May 18, 2018, blog post written by VP of operations and technology Tina Bhatnagar.  

“In 2017, the cryptocurrency space experienced a profound uptick in mainstream awareness and growth,” she wrote at the time. “As part of that, consumer demand for our services increased by 40x and we experienced transaction volumes in November and December of that year that grew by 295%.”

Coinbase wouldn’t make the same mistake twice, she assured us. And yet.

Ouch.

Image: screenshot/better business bureau

Of the 1,155 Coinbase customer complaints available on the BBB site, there are a substantial amount from this year. 

“My account disabled to log in on Nov 19th,” reads one complaint from April. “I filed a case report to CoinBase but it is never resolved up to now. I have money in my CoinBase account and have been waiting for 5 weeks to refreeze it. I cannot withdraw the money and trade Cryptocurrency.”

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That complaint was far from unique. 

“I wired $14000 (USD) to coinbase over a month and a half ago to purchase Bitcoin and the money hasn’t been processed into my account or returned,” reads another one from April. “I’ve opened up a ticket within coinbase 2 weeks after wiring the money but they have not given me any idea why the funds have not posted to my account.” 

How about a few more, all from May of this year, for good measure: 

Sent wire transfer 4 months back and haven’t received it in my **** account. Have called the **** support number numerous times and am still waiting for them to email me back with an update.

Coinbase froze my account. I can not access my funds to settle pymnt. I have asked coin base to unfreeze my account so i can make payments from my accouny.

I have been attempting to withdraw my funds from Coinbase since January 3rd, 2018. I have been back and forth with the technical team since then but they abruptly stop replying. I recently have talked to the support team on the phone twice but they mention I can’t escalate or speak to anyone else…regarding this issue. My money is stuck in limbo in their system and I have received no solution or answers.

in December 2017 I placed an order of $2000 dollar on coinbase, they however double charged me for another $2000 dollar which they refuse to refund me for. It’s been over 3 months and their support still wont acknowledge this. I’ve tried to get the money back via my bank but they say coinbase is…claiming the transaction was authorized (of course they would say that), and so I’m stuck with $2000 missing.

Again, these are not claims made late-2017 while Coinbase was experiencing a surge in new customers and activity. Rather, these are from a time when the value of bitcoin is down — along with interest in cryptocurrency in general.

A quick look at Google Trends puts this downturn into perspective. 

Way, way down.

Image: screenshot/google trends

According to Forbes, Coinbase generated $1 billion in revenue last year. Some of that, if the company is to be believed, was put toward beefing up its support staff following what can only be described as a tumultuous 2017.

It clearly has a few more hires to make. But hey, Coinbase will get there eventually. It promises.

Read more: https://mashable.com/2018/07/03/coinbase-better-business-bureau-complaints/

35 arrested after dark net sting seizes drugs, Bitcoin, and a grenade

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Read more: https://www.dailydot.com/layer8/darknet-sting/

Bitcoin price plunges after hack in South Korea

Read more: https://www.dailydot.com/debug/bitcoin-price-plunges/

Bitcoin price plunges after cryptocurrency exchange is hacked

Security fears rise as South Koreas Coinrail loses about 28m of virtual currency

There has been a sharp drop in the price of bitcoin and other virtual currencies after South Korean cryptocurrency exchange Coinrail was hacked over the weekend.

A tweet from Coinrail confirming the cyber-attack sent the price of bitcoin tumbling 10% on Sunday to two-month lows.

The worlds best-known cryptocurrency lost $500 (372) in an hour, dropping to $6,627 on the Luxembourg exchange Bitstamp, while most other digital currencies also recorded large losses.

The latest attack highlights the lack of security and weak regulation of global cryptocurrency markets.

Coinrail later said in a statement on its website that its system was hit by cyber intrusion on Sunday, causing a loss for about 30% of the coins traded on the exchange. It did not quantify the value, but the local Yonhap news agency estimated that about 40bn won (27.8m) worth of virtual coins was stolen.

Coinrail said: Seventy percent of total coin and token reserves have been confirmed to be safely stored and moved to a cold wallet [not connected to the internet]. Two-thirds of stolen cryptocurrencies were withdrawn or frozen in partnership with related exchanges and coin companies. For the rest, we are looking into it with an investigative agency, related exchanges and coin developers.

Police have begun an investigation, according to the Korea Herald, which cited a spokesperson as saying: We secured the access history of Coinrail servers and we are in the process of analysing them.

Bitcoin was trading at about $6,750 on Monday afternoon down from an all-time peak of almost $20,000 in the week before Christmas. In February, it fell to $5,900.

Bitcoin price chart
Bitcoin price chart

South Korea is one of the worlds major cryptocurrency trading centres, and is home to one of the busiest virtual coin exchanges, Bithumb.

There have been a series of thefts from cryptocurrency exchanges in recent months. Japans Coincheck was hacked in January, with more than $500m-worth of digital currency stolen. It started reimbursing customers in March, but faces two class-action lawsuits. In December, the South Korean exchange Youbit shut down and filed for bankruptcy after being hacked twice.

Naeem Aslam at online trading platform ThinkMarkets said: The question is: is there any limit to these hacks? After every few months, we are seeing the same pattern emerging. This is the result of loose regulatory control and regulators must step in to protect the consumers. Anyone who wants to do anything with exchanges should be forced to adopt high-grade security and regular security upgrades.

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The Wall Street Journal () reported on Friday that US regulators were investigating potential price manipulation at four major cryptocurrency exchanges. The investigation comes six months after CME Group launched bitcoin futures. Coinbase, Bitstamp, itBit and Kraken have been asked to share trading data related to the futures contracts.

Analysts said bitcoin volatility was fading, after the price increased threefold between mid-November and mid-December. David Jones, the chief market strategist at trading platform Capital.com, said this was driven by increased publicity as bitcoin went from being a niche IT interest to becoming mainstream, but added that the hype has now gone.

He noted that Facebook and Google had banned cryptocurrency adverts. Plenty of latecomers to the cryptocurrency rally have had their fingers burnt, have taken their losses (or are still sitting on them) and have vowed never to return, Jones said. Activity amongst the wider public has slowed. Arguably, the introduction of a listed futures contract for bitcoin has also calmed the wilder market moves.

The subheading of this article was amended on 12 June 2018 because an earlier version referred to Coincheck losing about 28m of virtual currency. That loss was meant to refer to Coinrail.

Read more: https://www.theguardian.com/technology/2018/jun/11/bitcoin-price-cryptocurrency-hacked-south-korea-coincheck

Steve Bannon backs bitcoin and eyes his own ‘deplorables’ cryptocurrency

Ex-Trump strategist calls cryptocurrency disruptive populism and says he is interested in making a currency of his own

Its been a tough few days for bitcoin. On Sunday, the South Korean cryptocurrency exchange Coinrail was hacked, which caused the price of bitcoin to tumble. Prices fell again on Wednesday after a study found bitcoins huge spike last year (the currency reached nearly $20,000) might have been the result of strategic price manipulation.

Despite all the bad news, bitcoin still has its believers, including Steve Bannon. In an interview with the New York Times, the former White House strategist said that he has a good stake in bitcoin and is interested in working with entrepreneurs and countries interested in creating their own cryptocurrencies. Bannon may also have ambitions to create a currency of his own. Earlier this year, in a meeting at Harvard University, he apparently discussed creating a new digital currency called deplorables coin.

Bannon says he isnt interested in cryptocurrencies solely for the financial potential; he sees decentralized money as a key component of his political mission. Cryptocurrency is disruptive populism, it takes control back from central authorities, said Bannon. It was pretty obvious to me that unless you got somehow control over your currency, all these political movements were going to be beholden to who controlled the currency control of the currency, is control of everything.

The deplorables coins name references the time Hillary Clinton called half of Trump supporters a basket of deplorables during the 2016 election. Clinton later said she regretted it; it had handed Trump a political gift.

White nationalists were interested in the political potential of cryptocurrency long before bitcoin entered the mainstream. In 2014 Andrew Auernheimer, a neo-Nazi who goes by the name weev, wrote on his blog: I heartily encourage you to consider cryptocurrency, including bitcoin. And in March 2017 Richard Spencer declared on Twitter that Bitcoin is the currency of the alt-right.

A number of neo-Nazis have also been pushed into cryptocurrency because they have been barred by traditional payment platforms. Shortly after the violent white supremacist rally in Charlottesville last year, Apple and PayPal disabled payment support for websites that support hate groups.

Bitcoin is the most well-known digital currency, although white nationalists are beginning to gravitate towards Monero, which Wired recently called the dark webs favorite currency. Monero, which claims to be more untraceable and secure than bitcoin, has, for example, been enthusiastically promoted by white nationalist podcaster Christopher Cantwell. Cantwell is offering 10% subscriptions to his site if you pay in Monero.

Despite recent dips in cryptocurrency prices, their astronomical rise last year made a lot of white nationalists, including weev, very rich indeed. In his interview, Bannon didnt say how much money he has made from cryptocurrency, but one imagines hes got more than enough to start minting baskets of digital deplorables.

Read more: https://www.theguardian.com/us-news/2018/jun/14/steve-bannon-cryptocurrency-deplorables-bitcoin

Rest Easy, Cryptocurrency Fans: Ether and Bitcoin Aren’t Securities

The world's second-most popular cryptocurrency isn't an investment vehicle, at least according to the Securities and Exchange Commission. William Hinman, the agency's director of the division of corporate finance, said Thursday that ether—the currency that powers the Ethereum network—shouldn't be regulated in the same way as stocks and bonds.

His statements follow similar ones made in April by SEC chair Jay Clayton about bitcoin. Taken together, the two sets of remarks provide the clearest understanding of how the regulatory agency views the cryptocurrency market. In essence, when a cryptocurrency becomes sufficiently decentralized, as the widely popular bitcoin and ether have, the agency no longer views it as a security. In contrast, smaller initial coin offerings, or ICOs, are almost always securities in the SEC's eyes. That distinction matters, because securities are subject to the same regulations as normal stocks.

“Based on my understanding of the present state of ether, the Ethereum network, and its decentralized structure, current offers and sales of ether are not securities transactions,” Hinman said at Yahoo's All Market Summit: Crypto in San Francisco. "And, as with bitcoin, applying the disclosure regime of the federal securities laws to current transactions in ether would seem to add little value."

'Current offers and sales of ether are not securities transactions.'

William Hinman, SEC

Joe Lubin, a cofounder of Ethereum and the founder of CosenSys, a major Ethereum application company, says he is grateful for the SEC's decision. "We applaud the clarity provided by Director Hinman and the SEC today," Lubin said in a statement. "Ether and other next-generation consumer utility tokens will continue evolving the web towards networks that are more fair, secure, and evenly distributed. ConsenSys looks forward to continuing to engage with regulators around the globe to promote responsible adoption of this transformative technology."

Hundreds of different developers run applications on top of the Ethereum network and contribute to its code. A similar number, if not more, help to develop Bitcoin. "The network and the software development is sufficiently decentralized that there isn't a discernible third party upon whom we would really expect investors to be reliant," says Peter Van Valkenburgh, the director of research at Coin Center, a think tank focused on policy issues facing blockchain technology. That's an important distinction from traditional securities, like Apple or Microsoft stock, in which you're betting on a specific company's efforts to develop products and services and generate income.

The SEC's Hinman notably stopped short of declaring that the initial investments made in ether weren't securities. It's possible that investments made early, before the currency became truly decentralized, could still be viewed as traditional investment vehicles. "The director was pretty clear to not be definitive about that activity," says Van Valkenberg, who also suggests that this indicates the people who got in first—and have likely made the most money—could someday face regulation.

Hinman also said that other cryptocurrencies may become "sufficiently decentralized" in the future, to the point where "regulating the tokens or coins that function on them as securities may not be required." But this doesn't mean all cryptocurrencies can evade scrutiny from US regulators. The SEC has held that most so-called token sales and ICOs are likely subject to regulation, because they generally power a single startup's product or application. ICOs are opportunities for investors to purchase the tokens that power a blockchain startup, typically before its product has gone live.

Complicating the issue: Many tokens run on top of the Ethereum network itself. So while buying and trading ether is not seen as making a traditional investment, buying and selling specific tokens that run on top of that network would be.

The SEC has ramped up its enforcement efforts against fraudulent ICO schemes in recent months. In December, the agency's new cyber unit announced it had filed its first ever complaint, against the cryptocurrency PlexCorps, for allegedly swindling customers out of $15 million. A month later, it halted one of the largest ICOs ever, for the Dallas-based startup AriseBank.

This doesn't mean all cryptocurrencies can evade scrutiny from US regulators.

In February, the SEC told the Senate's Committee on Banking, Housing, and Urban Affairs that it was open to "exploring with Congress, as well as our federal and state colleagues," whether to regulate cryptocurrency exchanges, websites that allow customers to convert and trade different coins for a fee.

And then in April, the agency charged the two founders behind an ICO that raised over $32 million, for allegedly selling fraudulent and unregistered investments. The scheme had received endorsements from professional boxer Floyd Mayweather and music producer DJ Khaled.

Owners of bitcoin and ether, however, now appear safe from that sort of close scrutiny. That doesn't mean that investing in either cryptocurrency is necessarily safer. Researchers at the University of Texas found that a price manipulation campaign may have partially accounted for an increase in bitcoin's price last year, for example. All that the SEC's declarations really say is that you're betting on an entire ecosystem, rather any one player.

Predictably though, both ether and bitcoin prices spiked Thursday, likely in response to the news.


More Great WIRED Stories

Read more: https://www.wired.com/story/sec-ether-bitcoin-not-securities/

Meet Erik Finman, the teenage bitcoin millionaire

Finman used his fortune to fund an educational business and hes not as awful as he seems on Instagram

Erik Finman is one of the worlds youngest bitcoin millionaires an achievement hes not shy about flaunting. The 19-year-olds Instagram feed is full of ostentatious photos of himself stepping out of private jets or lying on beds covered in money with captions like: Cash so worthless compared to Bitcoin Im sleeping on it

In one photo he is pictured smoking, with the caption: Sometimes you just need a good smoke to relax when you have to live with the exhausting burden of so much money and too many beautiful women. After one of his fans admonishes him, he replies: Dont worry guys. Its not a real cigarette. Just a hundred. Dont smoke!

The teenager, who first bought bitcoin at age 12 with $1,000 from his grandmother, styles himself in a similar vein to the notorious Martin Shkreli; hes just younger and not in jail.

However, all is not as it seems with Finman. Far from being a vapid bitcoin bro, he admits his social media presence is a carefully calculated front. I think being a provocateur is a fun way to get people to pay attention to my ideas, he tells me over the phone from his current base in San Francisco. You see the reaction to it, people go crazy. But that helps draw attention to the actual world-changing projects that I want to do.

Cash so worthless compared to Bitcoin I’m sleeping on it…

A post shared by ERIK FINMAN (@erikfinman) on

Finman first heard about bitcoin when his older brother took him to an Occupy Wall Street protest. He fell in love with the revolutionary potential of cryptocurrency, he says. An early adopter, Finman bought his first bitcoin when it only cost around $10. Just a few years later, it hit around $1,100. Finman sold $100,000 worth of bitcoin when the currency was on the up and, at age 15, used the money to start an online educational business called Botangle, which matched students with tutors via video chat. He was inspired to start the business, he says, because he had a terrible school life. One teacher told him to drop out and work at McDonalds while another held an Erik Finman roast session where students were encouraged to make fun of him. Despite his business success, his parents wouldnt let him completely drop out of school. So he made a bet with them: if he made $1m before turning 18, he wouldnt have to attend college. He won that bet last year.

Education is a big deal for the Finman family. His parents met at Stanford while getting their doctorates in electrical engineering and physics and his entire family, he says, is very smart. I think of them as the Elon Musk version of the Kardashians, he says. His mom was involved in Nasa in the 1980s and, Finman says, almost became an astronaut on the Challenger mission. However, she got pregnant with Finmans brother and, luckily, avoided the tragic launch. Apart from his experiences with high school, Finman seemed to have an idyllic childhood. He grew up on a llama farm in Idaho, for one thing. We had one llama called Sausage who unfortunately got turned into a sausage, he reminisces.

Like if you get the reference.

A post shared by ERIK FINMAN (@erikfinman) on

In 2015, Finman made his best business move: he sold Botangles technology. The buyer offered him either 300 bitcoin or $100,000 cash he opted for the bitcoin. At the time it was a gamble, as bitcoin had dipped and were worth around $200. Even though the currency continues to fluctuate wildly (I spoke to Finman shortly after the South Korean cryptocurrency exchange Coinrail was hacked, causing the value of bitcoin to plummet 10% to two-month lows) hes still made good on his investment. One bitcoin is now worth around $6,500. Finman has 401 bitcoin as well as various other cryptocurrencies and continues to bet on its future. Bitcoin will either be nothing or everything, and I think it will be more everything. Or crypto will, at least, he said.

Like his mother, Finman is also interested in space exploration. Hes currently working on a project with Nasa to launch a satellite containing a digital time capsule into space. The capsule will contain popular music and videos as well as other representative sounds of life on earth, and a Taylor Swift CD. Why Taylor Swift? We just reached out to her out of the blue, and she was into it, Finman shrugs. The project is meant to commemorate the 40th anniversary of the Voyager launch, which carried the Golden Record, a compilation of music and images from Earth, curated by the astronomer Carl Sagan, into space as a gift for any extraterrestrials who might stumble across it.

Sending satellites into space might be enough to occupy one person, but not Finman. The entrepreneur has a number of projects on the go. He recently created a robot suit based on the four-armed contraption worn by Doctor Octopus in Spider-Man for a 10-year-old child with hypermobility issues. The child, Aristou Meehan, is the son of one of Finmans mentors, and wanted his own Doctor Octopus suit to help solve his problems. So Finman made it for him. I wish someone would have helped me like that when I was his age, he says. There has already been some interest by investors in adapting the suit for various uses, says Finman, but hes moved on from it. Right now his big project is building a physical school and disrupting education. Hes tight-lipped on the actual details: Im still in early stages.

Finmans Office Desk

A post shared by ERIK FINMAN (@erikfinman) on

While Finmans social media presence may be satire, hes still rich and young. Doesnt he ever go a little off the rails? Oh yes, I got a fast car, did all that, Finman says. Traveled all over the world. Went a little crazy. Made a couple of stops in Ibiza and Monaco. I had to get it out of my system, you know. Hes also been careful to make sure his former teachers know about his success. I remember when the first article [about me] came out, I sent it to the worst teacher I had. The subject heading just said look at me now bitch. Finman put a tracking pixel in the email so he knows the teacher opened it. But I didnt hear back.

Read more: https://www.theguardian.com/technology/2018/jun/13/meet-erik-finman-the-teenage-bitcoin-millionaire

SEC says bitcoin and ether aren’t securities

Clarity is good.
Image: ULRICH BAUMGARTEN/GETTY

The world of cryptocurrency just got some much needed good news. 

With the prices of bitcoin and ether on a steady downward trend, the Securities and Exchange Commission today provided hodlers with a flash of hope: Neither of the cryptocurrencies are considered securities. 

So reports CNBC, which notes that the SEC’s head of the Division of Corporate Finance, William Hinman, delivered the news at the San Francisco Yahoo All Markets Summit: Crypto conference. If the SEC had decided differently, then exchanges and markets would likely have faced some serious regulation. 

And, well, no one in cryptoland likes regulation.  

The announcement was celebrated by big names in both the Ethereum and Bitcoin space. 

Oh, also, it had quite the effect on price. Coindesk shows both ether and bitcoin spiking on the news. 

But all this doesn’t mean the SEC is washing its hands of the entire emerging industry. According to Hinman, many ICOs are in fact securities and will be on the receiving end of SEC regulatory action. 

Interestingly, Yahoo News reports Hinman as explaining that simply calling something a coin or a token makes no difference in the eyes of his agency. More important is the extent of decentralization involved in the network in question. 

“Over time,” CNBC quotes him as saying, “there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required.”

So, you know, better hype up your blockchain project’s decentralized attributes now. It may save you from the SEC’s wrath later. 

Read more: https://mashable.com/2018/06/14/bitcoin-ether-not-security-sec/

Bitcoin bleeds following yet another exchange hack

We're going down again.
Image: traviswolfe/gettyimages

The prices of Bitcoin, Ethereum, and all other major cryptocurrencies have experienced big drops in the last 24 hours, following the news that South Korean cryptocurrency exchange Coinrail has been hacked. 

In a statement on its website Monday, Coinrail said that hackers stole up to 30% of the coins from its storage. 

According to Coinrail, the hackers struck on June 10 and made away with a number of different cryptocoins, including the recently launched Pundi X (NPXS), which makes roughly two thirds of Coinrail’s trading volume. Korea’s Yonhap estimated that a total of 40 billion won ($37.2 million) of coins went missing. 

Coinrail is a fairly small exchange with roughly $2.5 million in daily volume according to CoinMarketCap. “(Coinrail) is a minor player in the market and I can see how such small exchanges with lower standards on security level can be exposed to more risks,” Reuters quoted Kim Jin-Hwa, a representative at Korea Blockchain Industry Association, as saying. Coinrail said it is cooperating with the police investigating the hack and said it will release an announcement with more details as soon as possible. 

The cryptocurrency markets tumbled sharply following the news, with Bitcoin dropping from $7,240 to $6,752 in less than two hours, with the current price being $6,794. The second largest cryptocurrency by market cap, Ethereum, dropped from $570 to $511 before recovering slightly to $533. 

Other major cryptocurrencies experienced a similar drop. EOS, the fifth largest currency by market cap, had it worst of all: It plummeted 15% in the last 24 hours, and is currently trading at $11.2. EOS’s price drop is notable as this cryptocurrency is currently in the process of launching its main blockchain network (also known as mainnet) after having raised a reported $4 billion in a year-long initial coin offering (ICO), dwarfing all similar crowdfunding efforts. 

The Coinrail theft is the fourth major cryptocurrency exchange hack this year. In January, $400 million worth of cryptocurrency was stolen from Japanese exchange Coincheck, and in February, $200 million worth of cryptocurrency went missing from Italian cryptocurrency exchange Bitgrail. In April, cryptocurrency exchange Coinsecure said some $3.3 million worth of Bitcoin were stolen from its wallet. 

The total market cap of all cryptocurrencies has descended below $300 billion for the first time since early April; it currently stands at $297 billion. 

Read more: https://mashable.com/2018/06/11/coinrail-exchange-hack/

The true origin of Bitcoin’s early success

Read more: https://www.dailydot.com/business/bitcoin-history-silk-road/