- Ongoing mass sell-offs from the fraudulent Chinese investment scheme, PlusToken, may be to blame for the crypto market’s recent downturn.
- New Zealand has legalized cryptocurrency salaries, including payments in BTC, becoming the first nation to do so.
- China will soon launch its own central bank-issued digital currency as a competitor to Libra, giving the government unprecedented visibility into financial activity.
- South Korea has been the primary target for the cryptocurrency cyberattacks used to fund North Korea’s weapons program.
Ongoing mass sell-offs from the fraudulent Chinese investment scheme, PlusToken, may be to blame for the crypto market’s recent downturn. Dovey Wan, founding partner of Primitive Ventures, explained that PlusToken was a Ponzi scheme that promised high yield investment returns to its four tiers of members. Wan has attached data on wallet addresses — including BTC, ETH, and EOS — associated with PlusToken and urged exchanges to blacklist them. The Chinese police hunted down a core team member of the scheme two months ago, revealing that members were scammed out of more than $3 billion. Despite the arrest, however, the cryptocurrency cannot be rolled back.
According to investigative data from a security audit firm, the sell-offs may have begun in early July. Chinese traders have since reported that an unknown address has been dumping 100 BTC incessantly on crypto exchange Binance, which Wan believes may be linked to the scheme. The PlusToken scheme was the largest single incident of loss, according to a 2019 crypto theft summary from CipherTrace.
“Many of their BTC addresses are started with P2SH which commonly used for mutil-sig, most likely some ppl who hold the keys are not being caught hence police can’t unlock the wallet. For EOS/ETH wallet can be diff case but so far police was not able to touch any of those,” [Wan explains.]
In an attempt to curb the impact of the sell-offs, she has recommended that Peckshield and blockchain analytics firm Chainalysis analyze the flows more closely, noting that PlusToken appears to be moving their funds in small batches of 50–100 BTC into exchanges.
Starting on September 1, New Zealand will legally allow companies to pay salaries in cryptocurrency, becoming the first nation to do so. The country’s tax agencies ruled that wages and salaries may be paid in crypto as long as the preferred digital coin is pegged to at least one fiat currency. New Zealand also requires that the crypto payments be directly convertible into a standard form of payment. This legislation will allow bitcoin (BTC) to serve as a form of payment for New Zealanders once the law goes into effect. Companies paying workers in cryptocurrency can deduct income tax through the country’s pay-as-you-earn plan.
New Zealand is not the only government to turn its sights to crypto. Following the unveiling of Facebook’s Libra stablecoin, global leaders have been debating how best to regulate the emerging asset class. By and large, cryptocurrencies are still considered and novel and volatile investment assets by most governments. This move does lend more legitimacy to the space in general and will pave the way for broader adoption.
The move brings the controversial digital asset further into the realm of everyday payment methods. Cryptocurrencies are relatively free of regulation, and their untrackable nature helped them grow popular with anonymous online purchases. The move serves as “another step towards governments recognizing that, actually, people are wanting to be paid in” cryptocurrencies, said Thomas Hulme, a solicitor at London-based law firm Mackrell Turner Garrett, to the FT.
Following the unveiling of Facebook’s Libra stablecoin, Chinese officials announced that they would soon launch a competitor: China’s own central bank-issued digital currency. Now China claims it’s state-run cryptocurrency is ready, but many remain skeptical — will this effort will be enough to counteract the threat posed by Libra?
Mati Greenspan, senior analyst at eToro, believes that China does have the technical power to release a cryptocurrency on a short timeline. However, it will still need substantial political capital to launch fully. Greenspan also notes that China’s crypto will not pose a real threat to Libra, given that it’s not intended for use on a global scale. He believes that China’s state-run crypto will function as a means of control, used to monitor all financial activity within China’s borders.
“This wouldn’t be difficult for the Chinese government to put out in a week or two,” [Greenspan] said. “This has more to do with political power… What they probably mean when they say ‘it’s ready to go’ is that they simply have the willpower to put it out.”
“This currency is not designed to give people financial freedom, like other forms of crypto, but rather to provide the Chinese government with a way to monitor transactions,” [Greenspan continued].
“China’s cryptocurrency will likely be a two-tiered system where the government will have final say over all transactions. Commercial banks within China will supposedly be the second tier, so it doesn’t seem like anybody else will be able to run a node,” [Greenspan explained.]
The Next Web
According to a United Nations (UN) report, South Korea has been the primary target for cryptocurrency cyberattacks led by North Korea. Of the 35 cyberattacks being investigated, South Korea was affected by 10. Meanwhile, India witnessed three attacks and Bangladesh and Chile each saw two. An additional 13 countries were hit by the wave of cyber activity as well.
North Korea has been targeting three points of vulnerability: the international payment system SWIFT, crypto exchanges, and individual wallets. The latter two types of attacks focus on obtaining cryptocurrency, either through hacking of crypto-jacking. North Korean hackers have also been sneaking mining scripts onto foreign computers to mine crypto covertly. South Korea is the country’s main target for mining operations. It is believed that the cyberattacks were used to fund North Korea’s weapons program with more than $2 billion in crypto assets.
UN experts made a point of emphasizing that these kinds of attacks are “low risk and high yield,” requiring few resources to enact.
UN investigators said South Korean cryptocurrency exchange, Bithumb, has been hacked at least four times… The UN’s report [also] highlighted a crypto-jacking incident in which North Korean hackers are thought to have hijacked South Korean computers to mine Monero and redirect funds to servers at a university in Pyongyang.
It’s believed the cyberattacks were used to fund North Korea‘s weapons program. Estimates suggest the country has amassed some $2 billion through these nefarious tactics… The reported attacks are being investigated and considered as attempts to violate UN sanctions.
That’s the roundup for August 17th. Check in next week for the latest news of cryptocurrency innovation and regulation around the world!
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