Big Four Auditor EY Launches Zero-Knowledge System for Private Transactions on Ethereum

“Big Four” auditor Ernst and Young has launched the prototype of a system that enables secure and private transactions to take place on the Ethereum (ETH) public network, according to a press release Oct. 30.

The system, dubbed EY Ops Chain Public Edition (PE), uses zero-knowledge proof (ZKP) technology, an alternative algorithm for authenticating distributed ledger entries, in which transacting parties provide proof of validity, but all other information remains encrypted, including their identities.

The prototype is aimed at enterprises that wish to keep their transaction records private without having to resort to a permissioned, private network. Paul Brody, EY’s Global Innovation Leader, Blockchain, has outlined that:

“With zero-knowledge proofs, organizations can transact on the same network as their competition in complete privacy and without giving up the security of the public Ethereum blockchain.”

The press release underscores that the $20 billion+ market cap Ethereum network offers enterprises a level of liquidity that “dwarfs” that of any existing permissioned blockchain, as well as removing the need for building an in-house private blockchain from scratch.

EY says it aims to “spur” enterprise blockchain adoption by supporting “both payment tokens and unique product and services tokens that are similar to the Ethereum ERC-20 and ERC-721 token standards.” Its offering extends to a prototype for a Private Transaction Monitor that captures transaction history for subsequent review.

Both EY Ops Chain PE and the EY Blockchain Private Transaction Monitor have reportedly been developed by EY blockchain labs in London and Paris and are still “with patents pending.” They are slated to be ready for full-scale product launch by 2019, the press release states.

Ethereum’s developers have long been working to support zero-knowledge proofs on the network, with Vitalik Buterin revealing in fall 2017 that a network upgrade had successfully verified a zero-knowledge “snark” proof on the Ropsten testnet.

Earlier this month, Dutch multinational banking and financial services corporation ING announced the release of its own more generalized open source blockchain tool, dubbed Zero-Knowledge Set Membership (ZKSM), which also aims to enable the validation of data on a blockchain with increased privacy.

Also this month, Ernst and Young released a stark report that analyzed data for the top initial coin offerings (ICOs) that raised capital in 2017, concluding they had “done little to inspire confidence” one year on.

$18 Million: Binance Freezes Crypto Accounts ‘Indirectly Linked’ to Troubled Russian Exchange, WEX

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$18 Million: Binance Freezes Crypto Accounts ‘Indirectly Linked’ to Troubled Russian Exchange, WEX

18-million-binance-freezes-crypto-accounts-indirectly-linked-to-troubled-russian-exchange-wex

Malta-based digital asset exchange, Binance, has reportedly frozen accounts that received over 93,000 Ether (ETH) from two different crypto wallets. The accounts have been suspended because they are believed to be linked to the controversial World Exchange Services (WEX).

Crypto Accounts Frozen

Leah Li, the global PR manager at Binance, confirmed on October 25th that the accounts were under investigation as WEX users had informed Binance’s management team that they had been unable to make withdrawals from WEX.

The users of the troubled Russian exchange also told Binance that they had been closely monitoring the accounts – as they were keeping track of incoming and outgoing transactions.

According to the WEX users, two wallets linked to the Russian exchange had moved large amounts of ether to Binance (via 25 transactions during the months of August and October). The users are now concerned that they might not be able to get their money back, because it appears that their funds have been transferred to Binance.

User Funds “Unavailable”

As CryptoGlobe reported recently, there have now been at least 35 police reports filed against WEX exchange because many users have not been able to withdraw their funds from the crypto trading platform for over three months.

WEX users have also complained about the exchange’s management and its customer service department. As covered, a crypto trader had claimed in August that he deposited $11,000 in litecoin (LTC) on WEX, however, he was told by the exchange’s representatives that his funds were not “available.”

The crypto investor had also said he was “100% confident” that his funds were unrecoverable – implying that they had been stolen.

Hundreds Of Frustrated Users

Notably, complaints against WEX continue to increase as there are reportedly hundreds of frustrated users that have expressed concerns about the exchange’s operations in various Telegram chat groups.

According to Coindesk, there is a Telegram group with over 400 members that is focused on filing police reports against WEX. There’s also another chat group with over 1,000 active members who are trying to retrieve their funds from WEX.

An estimated 93,000 ETH (appr. $18 million) may be at risk – as these funds have been moved to Binance. There might also be more user funds that could potentially be stolen as WEX’s users have been unable to withdraw most of the crypto assets from the exchange.

Commenting on the situation, Binance PR representative, Leah Li said: 

[We are] not familiar with the specific situation at WEX, [however], we always investigate user claims thoroughly and we will suspend account access if any unusual activity is detected. We are [also] encouraging users who may be impacted to file reports with local law enforcement and ask them to send us case numbers or official notices/letters of investigation. So far, we haven’t been provided with any notices yet.

Two Brazilian Banks Reopen Accounts of Local Crypto Exchange to Avoid Fines

Two major Brazilian banks have reopened the banking accounts of one of the local crypto exchanges experiencing banking issues recently, local crypto outlet Portal do Bitcoin reports Wednesday, Oct. 31.

The preliminary decision to reopen accounts in major banks Banco do Brasil and Santander Brasil for local crypto exchange Bitcoin Max was granted by the Federal District Court. The  judge ruled that the mentioned banks failed to notify the exchange of account closure, which was treated as “abusive conduct” violating consumer protection rules. The court then ordered to unlock the accounts within five days.

In case of non-compliance with the injunction, Santander Brasil would have to pay up to 5,000 Brazilian reals (about $1,300), and Banco do Brasil — up to 20,000 Brazilian reals (about $5,400). Leonardo Ranna, a lawyer for the crypto exchange, told local media that the accounts of Bitcoin Max and its partners were subsequently quickly reopened.

However, Portal do Bitcoin stresses that the legal battle is not over as the Federal District Court’s decision is only seen as a “preliminary” kind of injunction. Moreover, Banco do Brasil has also blocked the additional 120,000 Brazilian reals ($32,400) of Bitcoin Max’s funds. The court ordered to return them in 24 hours, according to the report.

As Cointelegraph reported in September,  Brazil’s antitrust regulator, the Administrative Council for Economic Defense (CADE), started inspecting six major national banks, including Banco do Brasil and Santander Brasil, for alleged monopolistic practices in the crypto space. The watchdog tried to reveal whether Brazilian banks deliberately closed the accounts of local crypto exchanges following several complaints.

A month later, in October, CADE sent a questionnaire to ten Brazilian crypto exchanges whose banks accounts have previously been closed, with deadline to respond set for mid-October. The companies were requested to explain how their business functioned in Brazil and clarify if they were unable to open a bank account, or if the account was closed by some financial institution.

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Major Profits for Early Bitcoin Investors, What Will the Next Ten Years Bring?

In investing, what is comfortable is rarely profitable and several findings support this popular claim. Back in 2014, a study The Digital Dividend-First Mover Advantage, published by Harvard Business Review Analytic Services and sponsored by Verizon Enterprise Solutions, found that early adopters of technology—in finance or otherwise, are more likely to experience better business outcomes in terms of revenue and market position.

Needless to say, Bitcoin is a success story for early adopters and has clearly put this assertion to test. Like it has been the case in anything potentially disruptive and against status quo, Bitcoin faced a lot of opposition in early days with some even claiming that the peer-to-peer cash payment system is too libertarian, too rebellious and a tool for money laundering.  It is 2018 but some critics, as the London-based entrepreneur Jez San even say, Bitcoin is “is way too hard to use – it’s so user unfriendly that the man in the street just can’t use it”.

On the other hand, evangelists such as the Winkenvloss Twins who have since made billions and are known serial investors, believe Bitcoin is a trillion-dollar asset waiting to blow up despite price roller-coaster ride since inception back in 2008.

A Bitcoin Success Story

Bitcoin prices have been volatile to say the least. And it was even worse in the early days because despite retailing for cents, liquidity was shallow. Luckily, operators were technology lovers not speculators. In 2011 for example, Bitcoin was cheap retailing at around 30 cents apiece.

An initial purchase of $100 would turn in around 333 BTC. At current market rates, this investment is worth $2.131 million at $6,400. But, since the markets are down 70 percent from their peaks, this $100 purchase would have been worth a massive $6.66 million in late 2017. This $0.30, $1,000, $6,000, $20,000 and $6,000 rise and falls are the hallmarks of a volatile market.

Though the rise has been precipitous, the path has been murky to say the least. And not surprising, those who bought their coins when it was worth cents are not bothered. They have been in the game for a while now they are used to the eruptions and resulting cool-offs.

Take Marshall Hayner for example. An earlier adopter who took a chance with the fledgling technology and started mining Bitcoins back in 2009. He remains a staunch believer of Bitcoin and even with mild market moves, he believes Bitcoin is still a winner:

“I have seen these run-ups and drops in bitcoin and I did not even flinch as a believer in this technology. I really believe that bitcoin is the next digital gold” he told Reuters.

His overview is confirmed by Daniel Peled, an Israeli Entrepreneur who is happy regardless of the next turn of price.

The Trillion-Dollar Market in Waiting

While price and resulting market caps of digital assets are important, investors and traders alike should look at other metrics like use and adoption rate. Bitcoin might be facing some opposition in certain areas because of the global, decentralized nature of its underlying technology. Add that to the fact that money is involved, governments are clamping down on rogue elements. To some  degree, this hampers adoption.

But behind it, its infrastructure is flourishing. As the market tapers off and finds support at $6,000, Bitcoin is poised to take off. This is more so the case once a regulatory balance is struck and developers devise efficient solutions such as the Lightning Network that allow payment channels with micro-transactions at near real time settlement.

Merging all these factors it is easy to see why Bitcoin is here to say. In years to come, it could quickly turn into a store of value or a medium of exchange. Regardless of what it becomes, early investors, or even those that get in now could be set to reap big rewards.

 

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Goldman Sachs is Now Offering Bitcoin (BTC) Derivatives Products, No Ether (ETH) Contracts For Now

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Goldman Sachs is Now Offering Bitcoin (BTC) Derivatives Products, No Ether (ETH) Contracts For Now

goldman-sachs-is-now-offering-bitcoin-btc-derivatives-products-no-ether-eth-contracts-for-now

Giant Wall Street investment bank, Goldman Sachs, has reportedly started offering bitcoin (BTC) derivatives products to its clients. At present, the New York-based financial institution is not planning on offering similar contracts for Ether (ETH) or other major cryptocurrencies.

According to TheBlock, Goldman Sachs will not be rushing to launch new crypto-related products, and its bitcoin non-deliverable forward contracts (“a derivative product tied to futures”) is only available to a select few clients of the bank for now.

With over $900 billion in total assets, Goldman Sachs is currently looking into various options which would allow it to offer custody solutions for cryptocurrencies. There had also been reports earlier this month that the multinational financial services company was “actively exploring the creation” of an ether-based non-deliverable forward contract.

Inaccurate Reports Regarding Ether Futures

This was first reported by the Abacus Journal, however, a source closely following Goldman Sachs’ operations told TheBlock that the bank was not planning to introduce any type of derivatives product for ether (anytime soon).

Moreover, it might not be possible at this time to launch an ether-based product as ether futures contracts are not currently issued by any regulated US-based exchange. The Chicago Board Options Exchange (Cboe) Global Markets had said earlier this year that it would soon be introducing ether futures contracts, however, the exchange holding company has not yet followed through with its plans.

Meanwhile, sources familiar with Goldman Sachs’ internal operations have said that the bank’s customers are not really looking for any new crypto-related products at this time.

Coinbase Receives “Qualified Custodian” Status

Although many institutional investors have begun to take more interest in cryptocurrencies, they have not yet made substantial investments in them due to their volatile nature. Institutional clients are also looking for reliable custodial solutions for digital assets.

San Francisco-based crypto exchange, Coinbase, has been actively working to develop custodial solutions for cryptos. Launched in July of 2018, Coinbase Custody has now become an independent qualified custodian under New York State Banking Law.

Coinbase Custody’s qualified custodian status allows the company to offer regulated custodian services for bitcoin (BTC), ripple (XRP), litecoin (LTC), bitcoin cash (BCH), ether (ETH), and ethereum classic (ETC).

BlackRock CEO: Clients Not Interested In Crypto

Although it appears that crypto firms are trying to meet the demands of institutional clients by introducing products specifically for their use, many would-be investors are trying to better understand crypto assets.

Sources close to Goldman Sachs have said that the institution’s clients have been contacting its senior bankers to inquire about how they can “break into the market.”

Interestingly, Larry Fink, the CEO of BlackRock, an American global investment management firm with over $6.2 trillion of assets under management, said in July:

I don’t believe any client has sought out crypto exposure. I’ve not heard from one client who says, ‘I need to be in this.’

Korea’s Top Financial Regulator: Crypto Exchanges Should Face ‘No Problems’ With Banks

The chairman of South Korea’s Financial Services Commission (FSC) has affirmed that crypto exchanges should face no issues with banking provisions, local media platform Token Post reported Oct. 30.

The FSC’s Choi Jong-Ku clarified that banking support would be provided as long as exchanges have adequate anti-money-laundering (AML) safeguards in place and apply robust know-your-customer (KYC) checks.

In particular, Korean banks previously could offer “virtual” accounts to crypto exchanges to provide traders with more anonymity. In January, South Korea had introduced strict AML rules for exchange operators, designed to prevent anonymous trading by stipulating that all accounts be linked  to a ‘real name’ bank account and leading numerous banks to stop providing virtual accounts in order to comply.

Choi’s statement explicitly addressed this mechanism, saying that with adequate security and compliance measures, banks’ provision of the virtual account service faces “no problem.”

The positive statement is reported to have been well received by the Korea Blockchain Association, whose chairman Chin Daeje, affirmed that regulators’ concern over both KYC and AML compliance has been addressed and “resolved” by the domestic exchange sector.

In late summer, Bithumb, one of the country’s largest crypto trading platforms, regained the support of its banking partner Nonghyup after the latter had ceased its services for the exchange in the wake of a high-profile hack. The exchange clarified in a statement that it had regained banking access by following a series of requirements, including a decision “to keep the investor assets separate, and not [to] accept interest or deposits.”

Choi’s remarks come at a pivotal time for the Korean crypto sector, which awaits the possible announcement of a government decision in November over whether or not to repeal the country’s local ban on Initial Coin Offerings (ICOs), which has been in force since September 2017.