CNBC: Facebook Has Not Contacted Swiss Regulators On Libra’s Registration

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Libra Controlled By ‘Largely Massive Corporations’: AOC

Alexandra ocasio cortez bashes libra News

Libra Controlled By ‘Largely Massive Corporations’: AOC

During the second day of congressional hearings, New York Representative Alexandria Ocasio-Cortez (AOC) grilled Facebook executive David Marcus over Libra’s centralization.

The 29-year-old congresswoman went directly at Facebook for calling Libra a decentralized project. She questioned Marcus over the procedure using which they handpicked 27 founding members for the Libra Association, a so-called nonprofit backing Facebook’s cryptocurrency.

Realizing that Facebook had installed principal founders using a $10 million investment as one of the criteria, AOC said that the social media giant backed crypto would become “a currency controlled by an undemocratically-selected coalition of largely massive corporations.” Marcus responded by saying that Facebook’s digital asset does not want to replace sovereign currencies, and their broader purpose is to work with regulators and address all their concerns in due time.

Rep. Adams: Can Consumers Become Nodes on Libra Blockchain?

Another congresswoman that appeared unimpressed was North Carolina Representative Alma Adams. The veteran politician questioned Marcus whether he would allow everyday consumers to run a node on the Libra blockchain, a practice that is common in decentralized blockchains where individuals could set up their own mining rigs to run the network.

“No, congresswoman, they cannot,” replied Marcus, explaining that their criteria allowed only big firms and companies with at least background in technology/blockchain or finance to become a member of the Libra Association.

When asked why major companies would make a $10 million investment into Libra, Marcus said their existing partners agreed that the status quo in finance is not working for too many people. They deserve lower costs and easy entry into the digital money infrastructure.

“That is why they have joined Libra,” added Marcus.

A Difficult Transition

AOC’s questions followed Libra’s claim of transitioning into a permissionless network. In retrospective, Libra is a blockchain-based payment network that would rely on not one but a set of nodes to confirm and store transactions on a public ledger. In the technical paper released last month, the Libra Association stated that their blockchain would initially be centralized and the founding members, which include names like Uber, PayPal, and Visa, would act as nodes.

The association promised that, over time, they would decentralize the Libra blockchain to distribute its control among more partners. Nevertheless, how would these new members make into the Libra club is a question that remains unanswered. There are also questions about what incentives investors would have to grow the membership – and to give up the float eventually.

Jerry Brito, the executive director of Coin Center, said Libra’s dream to become a permissionless ledger has technical, legal, and governance challenges.

“I’m not sure how Libra gets to permissionless—at least as I understand that term. I sincerely hope they’re able to, though, and am excited to see them try,” Brito tweeted.

Do you think Facebook’s “cryptocurrency” will falter under regulatory pressure? Share your thoughts in the comments below!  

Images via Bloomberg TicToc “AOC Grills Facebook Exec on Libra Digital Currency” YouTube Video, Twitter: @crypto, @jerrybrito

Peter Todd Accused of Sexual Abuse, ZCash Founder Testifies

Peter Todd Accused of Sexual Abuse, ZCash Founder Testifies

Peter Todd filed a defamation suit against Sarah Michelle Reichwein a.k.a Isis Lovecruft, after the former accused him of sexually harassing her. In support of her argument, Zooko Wilcox, founder of ZCash and the Electric Coin Company, testified as an acquaintance to both as well as the second complainant who claims Peter Todd raped her on a visit to Germany: Todd vehemently denies these claims, July 17, 2016.

Allegations and Rebuttal

This incident was first seen in a public forum when Lovecruft replied to a GitHub issue raised by Todd on code she had written, accusing him of standing up for someone (Jacob Appelbaum) who had raped her.

Until April 2019, when Todd filed a defamation suit, none of this was in the limelight, and after Zooko’s testimony, it has resurged over social media.

In his testimony, Zooko claims to have seen Todd’s advances towards a female friend of his, after which she told him she feels uncomfortable and to help her get away. After finding out that Todd supposedly spoke of Lovecruft, made unwanted sexual advances, and spoke of them in a demeaning manner to a group of friends.

Nearly a year later, Zooko claims to have learned from another female friend that Todd had raped her while she was mentally ill; her testimony is included in court records but her identity remains anonymous to the public.

Isis Lovecruft has also accused another of sexual abuse, Nadim Kobeissi, the author of Cryptocat.

The next hearing is set for August 22, 2019.

Diversity in Crypto

The lack of representation from females in the software and cryptography space has long been a topic of debate. While some believe it is because of the relatively lower number of women in the engineering talent pool, a lot of there believe it is a practice that arises out of malice.

People have tried to use blockchains to register things like consent, but that brings about a large number of issues – the biggest of which is the inability of a party to revoke consent after it is registered.

This is a wake-up call for the entire community to see that abuse does exist within the realm of software and network development. Whether Peter Todd is guilty or not is up to the court, but people must be more vigilant about such incidents.

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Swiss Crypto Broker Bitcoin Suisse Applies for Banking and Securities Licenses

Bitcoin Suisse, a crypto-broker and pioneer of Switzerland’s “Crypto Valley,” has taken anticipatory steps to comply with a “maturing” regulatory environment.

The firm announced on Tuesday that it has applied for a banking license with Swiss Financial Markets Supervision Authority (FINMA), as well as a security dealer’s license, mandated by the Stock Exchange and Securities Trading Act (SESTA). In the past, financial authorities at the Swiss Federal Council said blockchain and distributed ledger technology will be governed by existing regulatory schemes.

However, a Suisse company representative said:

“We believe that in the long-term, more regulation will follow, as soon as the legislation catches up with the technological developments of the space. We believe that within this new regulatory environment, companies without the necessary licenses will have a limited ability to serve clients with the full spectrum of high quality, innovative crypto-financial products and solutions.”

In the announcement, the company said these preemptive licenses will expand the number of regulated services and products it can offer as “more and more crypto assets and services fall under securities and banking law.” At the moment, the company representative denied comment on specific assets, but offered, “A securities dealer license would enable us to trade crypto tokens that have been classified as securities by the financial regulator. This would include our own stable coin, the Swiss Crypto Franc.”

In May, SIX, the Swiss national stock exchange group announced it was developing the CHF Stable Coin pegged to the Swiss franc – to automate processes and potentially tokenize assets on the SIX Digital Exchange.

As part of Swiss banking guidelines, the company announced it has deposited CHF45 million – an equivalent amount in USD – as collateral for a default bank guarantee. It plans to increase this reserve by CHF10 million, past the mandatory limit. These holdings will help secure clients’ fiat and pooled crypto deposits.

This is not to say Swiss regulations are overly burdensome. “The regulatory industry in Switzerland is very crypto-friendly. The Federal Council as well as the FINMA are pursuing a very constructive approach that fosters innovation in the long-term,” a company representative said

Indeed, these applications come after the firm already extended its list of tradable assets to 125 cryptocurrencies, enabling more than 6,000 trading pairs, as well as the firm’s entrance into the collateralized lending and credit markets for institutional clients last year. Its expanded footprint also includes the firm’s subsidiary Swiss Crypto Vault AG which provides custodial crypto storage for businesses. As of June, the vault oversees $1 billion in assets.

Founded in 2013 as a brokerage, the firm has expanded to include prime brokerage, trading, storage, and lending services.

According to the announcement, Suisse’s net income this past year reached CHF25 million, from revenues of CHF44 million. It has also added 90 experts to its staff and expanded offices to Zug, Copenhagen and Vaduz.

Swiss army knife photo via Shutterstock

US Congressman: You Can’t Kill Bitcoin, Libra And Others Trying to Mimic

All eyes are on Bitcoin, Facebook’s Libra, and the entire cryptocurrency market this week, following a tweet from the United States President Donald Trump, a Senate hearing on Libra, and an abundance of financial industry chatter as the crypto market takes its first steps towards serious regulation and legitimacy.

But before it happens, Bitcoin still has growing pains to go through. The asset has been performing well since it’s bear market bottom, but the sudden fear over the coming regulation has caused the entire market to panic and a sell off has begun. However, one United States Congressman offers some reassurance to Bitcoin investors: “there’s no capacity to kill Bitcoin.”

U.S. State House Representative Patrick McHenry: You Can’t Kill Bitcoin

The talk across the financial space and corporate world is currently about Facebook, Mark Zuckerberg, and the corporation’s plans to launch its own digital currency called Libra. The company has formed a consortium with other major corporations to launch what they envision to be the future of money: a fiat-backed cryptocurrency in the vein of Bitcoin, but with additional controls and centralization – the complete opposite of what Bitcoin stands for.

Related Reading | The United States’ Distrust in Facebook Libra Is Spilling Into Crypto 

The emergence of Facebook Libra has brought a nasty rain cloud over the crypto industry that had just shed its “crypto winter.” Now, as another storm is on the horizon, many are preparing for the worst – such as the destruction of Bitcoin and cryptocurrencies.

But Bitcoin cannot be killed, according to North Carolina House Representative Patrick McHenry, who defended the first ever cryptocurrency on a segment of the CNBC’s Squawk Box says that he thinks “there’s no capacity to kill Bitcoin.”

“I think there’s no capacity to kill Bitcoin. Even the Chinese with their firewall and extreme intervention in their society could not kill Bitcoin,” he added.

The comment was made in response to CNBC technology correspondent Josh Lipton who had asked the politician if regulators like himself would “allow the emergence of these new types of currencies if they don’t look a lot like the regulations and guardrails we currently have around fiat currency and money.”

Altcoins Are Not As Safe From Regulation or Destruction

McHenry believes that as a first mover in the space, and because Bitcoin’s distributed ledger it’s decentralized, it cannot be stopped, as its creator had intended.

As for altcoins, the policy maker says that “new iterations of” Bitcoin are trying to “mimic it,” but because they aren’t fully open source or completely decentralized, there’s “mechanism” to destroy or control them that just don’t exist in altcoins.

Related Reading | Bitcoin Blasts Below $10K, Following Senate Hearing on Facebook Crypto 

Lipton poses the example of what if “Coinbase cannot accept money from a US citizen,” suggesting such regulation would be incredibly harmful for Bitcoin.

“I’m not saying you you will shut down Bitcoin, it will exist somewhere, and be sort of in a dark web kinda situation, but it would effectively make it difficult for the mainstream to use it.

McHentry argues that it isn’t yet mainstream, and that even if Bitcoin may be forced to live in the “shadows,” it’ll live on. He added that it’s something that people once “gave away fro free” and now it’s worth nearly $10,000 per coin and something that companies like Facebook and others are trying to “mimic.”

Lightning Network’s Antifraud Methods Inferior to Nakamoto Consensus, Research Shows

Lightning Network’s Antifraud Methods Inferior to Nakamoto Consensus, Research Shows

The Lightning Network, the touted scaling solution for the BTC chain, has recently seen its capacity decrease significantly and the beta project is still best suited for a cliche of technically savvy users. Now according to an analysis by Bitmex Research, the Lightning Network’s nodes have taken 2.2 BTC in “justice transactions” even though the connections might not be dishonest.

Also read: Looking Beyond the Lightning Network Hype: Everyday Users Experience Issues

2.2 BTC Taken in Justice Scenarios on the Lightning Network

It’s been well over 18 months and the Lightning Network is still in an experimental form, and one that has strayed away from Nakamoto Consensus. The project is intended to be a second layer solution for BTC payments and microtransactions, but the undertaking has been slow and filled with technical issues. Lightning started on Jan. 18, 2018, with around 60 nodes and it was highlighted to be very “experimental” and “in testing.” At that time, there was around 1.2 BTC held within the network and now there’s more than 940,000 BTC or $9.8 million, on July 15. A great majority of those funds stem from a node called and some other big channels like Acinq, and On July 15, Bitmex Research examined the Lightning Network and discovered how a mechanism called a “justice transaction” punishes alleged ‘dishonest’ parties. So far, justice transactions stemming from the Lightning Network have confiscated 2.2 BTC or a touch over $20,000.

Lightning Network’s Antifraud Methods Inferior to Nakamoto Consensus, Research Shows
Figure 3 – Number of justice transactions – monthly, according to Bitmex Research.

“We explain how to arbitrarily construct a “justice” scenario and present data on the prevalence of this type of transaction on the Bitcoin network,” The Bitmex Research report highlights. “We have potentially identified 241 justice transactions, representing 2.22 Bitcoin in value, since the Lightning Network launched at the end of 2017.”

According to Bitmex Research, when a ‘thief’ attempts to pilfer BTC on the Lightning Network and they are caught, they lose the funds they tried to steal and the funds within the channel as well. Bitmex Research said while orchestrating the study, the team conducted their own justice transactions. Moreover, a member of the company Lightning Labs developed a tool that can detect these types of justice transactions. In total, Bitmex did 5 test justice transactions, which means the software’s “justice” scenario may not be accurate when it comes to identifying dishonesty.

“It is also possible that many of the 241 justice transactions do not indicate genuine dishonestly, for instance, it could be users testing the system, where the same user owns both lightning nodes in question,” the Lightning Network analysis explains. “For example Bitmex Research is responsible for 5 of the 241 justice transactions, when there was no victim, as Bitmex owned all the nodes and funds.”

Lightning Network’s Antifraud Methods Inferior to Nakamoto Consensus, Research Shows
Figure 4 – Value redeemed in justice transactions – monthly (BTC), according to Bitmex Research.

But Who Will Watch the Watchtowers?

The report follows the recent discussion concerning the idea of watchtowers on the Lightning Network. Watchtowers is another system of nodes that will attempt to protect the Lightning Network users from fraud. Basically, watchtowers are Lightning Network nodes that operate with a distinct algorithm and are meant to stop Alice from stealing Bob’s funds by monitoring transactions and channel states. Being permissionless by design, anyone will be able to run a watchtower, like individuals and companies, but blockchain surveillance firms could use them as well.

Lightning Network’s Antifraud Methods Inferior to Nakamoto Consensus, Research Shows
Lightning Network skeptics believe if you use BTC offchain with the Lightning Network, government entities and law enforcement agencies could use watchtowers. If they don’t like you for one reason or another (political, etc.), the watchtower owner could refuse to route your payment and censor you.

Because the Lightning Network (LN) does not use Nakamoto Consensus (the system that confirms onchain transactions), funds on the Lightning Network could essentially be double-spent by issuing a former channel state. So if your LN node is not online 100% time and you go offline for a couple of days, your funds could get stolen. Watchtowers could easily bring unwanted third parties into the LN design, but proponents say that anyone could subscribe to a group of watchtowers by running one themselves.

Lightning Network’s Antifraud Methods Inferior to Nakamoto Consensus, Research Shows
Jameson Lopp’s defense against third parties who are bad actors using watchtowers is that you can run your own watchtower.

The 940,000 BTC or $9.8 million is actually a decline in the Lightning Network’s capacity as it has been slowly dropping over the last few weeks. According to Blockstream developer Rusty Russell, the latest rise in price may be the reason why the capacity has declined while also highlighting the project is still in its infancy. “I hope this is an indication that people are remembering that Lightning is still beta,” Russell noted. “and [are] reducing capacity to control their risk profile as the bitcoin price rises.” The problem, however, took place during the height of the last price pump as onchain BTC fees skyrocketed upwards of $3-5 per transaction and the mempool (transaction queue) became backed up. LN proponents have said that high fees may push more people into using the LN system, but this hasn’t come to fruition yet.

Lightning Network’s Antifraud Methods Inferior to Nakamoto Consensus, Research Shows

The controversial discussion concerning justice transactions made its way to social media and forums on Tuesday, which invoked criticism against the Lightning Network and the idea of using watchtowers. On the Reddit forum r/btc, the user known as u/Mobtwo condemned the justice transactions concept and said: “In other words, Lightning Network is not immutable — Who will be watching the watchtowers to make sure they are not in cahoots with the bad guys? And why does it have to be so complicated?” Professor of computer science, Jorge Stolfi wrote on Reddit that [justice transactions] could have been an accidental error like someone trying to close a channel with a backup copy of an LN wallet. “Or an LN wallet in a different computer, that does not have a record of the most recent payment through that channel,” Stolfi emphasized. Commenting further, Stolfi added:

Note that there is no safe way to sync [Lightning Network] wallets — like there is, sort of, for ordinary bitcoin wallets. That’s because payments made through a channel are not stored anywhere, except on the two nodes connected by it.

Lightning Network’s Antifraud Methods Inferior to Nakamoto Consensus, Research Shows
The Lightning Network’s capacity has been declining and projects like Wrapped Ethereum may surpass LN’s capacity in the near future. At the rate WBTC’s token contract is climbing, the project is very close to surpassing the Lightning Network’s capacity in just six months time.

Will Lightning’s Topology Concerns, Centralized Hubs, and Routing Problems Be Addressed in the Next 18 Months? Skeptics Think Not

Lightning has been criticized by many individuals and with a quick Google search, anyone can find lengthy studies about LN’s topology concerns, discussions about centralized hubs, and routing problems. Electron Cash developer Jonald Fyookball thinks liquidity is the Lightning Network’s biggest issue. For example, in order to get your payment to someone, every hop in the route has to have a channel open and ready with at least as much funds as you wanted to send, Fyookball explained. The blockchain engineer commented further and stated that the best-case scenario for LN liquidity would be mega superhubs like banks which wouldn’t be peer-to-peer anymore.

“All [Lightning Network] nodes have to online all the time. So the user needs an always full bitcoin node plus a lightning node,” Fyookball said summing up his LN critique. “There are a bunch of other [LN] issues too, like [developers] don’t know how to actually solve distributed routing as it’s a known hard, unsolved problem in computer science. And even if LN worked great, it would take decades to onboard the world based on BTC’s low capacity.”

What do you think about the Lightning Network’s justice transactions and watchtower concepts in order to combat against fraud? Do you think the Lightning Network will help BTC scale? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, Twitter, Bitmex Research, Bitcoin Visuals, and Pixabay.

Verify and track bitcoin cash transactions on our BCH Block Explorer, the best of its kind anywhere in the world. Also, keep up with your holdings, BCH, and other coins, on our market charts at, another original and free service from

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Jamie Redman

Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written thousands of articles for about the disruptive protocols emerging today.

Major Altcoins Rally as Bitcoin Sees Slight Gains

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Reasons Why US Government Won’t Ban Libra Cryptocurrency

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‘Smart Dubai’ Initiative Receives a Boost as DAG Platform Comes On Board

What can I do to prevent this in the future?

If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware.

If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices.