Blockchain-Based Exchange Set to List First Company in June

SprinkleXchange, a blockchain-based stock exchange, is aiming to list its first company next month, according to a Bloomberg report.

The Bahrain-based trading platform is developed on Ethereum’s blockchain platform and uses its smart contracts feature for trade settlements.

According to the report, the exchange claims its blockchain-focused approach offers time and cost savings in comparison to traditional stock exchanges given that the exchange operates within a regulatory sandbox created by the Bahrain’s central bank and uses a decentralized clearing and settlement system that uses automation.

Currently, the exchange has been given permission to list a maximum of 10 companies. In addition to that, prices will be set using the Dutch auction method, with the exchange taking a 1% fee.

Apart from listing stocks from companies, the blockchain-based exchange will also offer trading options with digital currencies and, similar to other crypto exchanges, will operate around the clock for both stocks and digital assets. The exchange plans to add exchange-traded funds (ETFs) in the future.

The CEO has revealed as well that the platform is only approaching small-cap companies with a market cap between $20 million to $200 million across all sectors.

CEO Alexander Wallin, has revealed that the exchange is aiming to bring around 35 companies within the next 12 months and expecting to list 1,000 companies over the next 3 to 4 years. Wallin further added that:

We have the luxury of being first with this, but we’re aware that it will become a crowded market. It’s like moving from VHS to streaming; Netflix did it nicely and was first, but now there are lots of streaming sites.”

A number of traditional stock exchanges are currently moving to integrate blockchain tech in their platforms. For instance, Switzerland’s top stock exchange, SIX, is also planning to launch a blockchain-powered exchange platform later this year, which will be powered by blockchain consortium R3’s Corda Enterprise platform.

Meanwhile the Gibraltar Stock Exchange has recently started allowing the listing of tokenized securities. The Australian Securities Exchange is notably rebuilding its ageing CHESS settlement platform using blockchain tech provided by Digital Asset. Other stock exchanges, including in Jamaica, Thailand and Spain, have announced as well initiatives involving blockchain technology and crypto assets.

Binance Exchange Suffers Security Breach Losing 7,000 Bitcoin

One of the largest cryptocurrency exchanges Binance has reported a “large scale” data breach in which unidentified hackers stole more than 7,000 Bitcoin (BTC) worth about $40 million.

Binance’s Security Breached

On May 7th, Binance issued a statement in which they announced that a “large scale security breach” had been identified and hackers withdrew 7,000 BTC worth about $40 million via a single transaction, marking this the latest in a long line of thefts in the digital currency space.

According to the exchange, the hackers used a “variety of techniques” including phishing and viruses to access user API keys, two-factor authentication codes and “potentially other info.” There may be additional accounts that have been affected but not yet identified, Binance said.

Respectively, the theft only impacted Binance’s BTC hot wallet and wiped out about 2% of the company’s total BTC holdings. The exchange assured that other wallets remained secure and unharmed.

CEO Changpeng Zhao has explained that “the hackers had the patience to wait, and execute well-prepared actions through multiple seemingly independent accounts at the most opportune time. The transaction is structured in a way that passed our existing security checks. It was unfortunate that we were not able to block this withdrawal before it was executed.”7

User Funds Are Safe

Apparently, once the transaction was executed, it triggered internal alarms, and following the discovery Zhao froze all withdrawals. The announcement comes hours after Zhao tweeted that the exchange was undertaking some unscheduled server maintenance, saying that “funds are #safu.”

In a tweet linking to the post, Zhao said it was “not the best of days, but we will stay transparent,” further adding that the exchange will conduct a thorough security review. Accordingly, the review of the hack will take up to a week, during which time all deposits and withdrawals will remain suspended. However, trading will continue to be enabled to allow investors to adjust their positions.

Binance further cautions users that hackers may still control some user accounts and may “use those to influence prices in the meantime.”

Meanwhile, the exchange platform informed that it will use its Secure Asset Fund for Users – an emergency insurance fund – to cover all losses and as such no user funds will be affected by the breach.

The emergency fund is made up of 10% of all trading fees held by the exchange, and was initially established to protect Binance’s users in extreme cases. It is stored in its own cold wallet.

Bitfinex and Tether In the Spotlight as the NYAG Alleges Them of Fraud

Crypto exchange Bitfinex has allegedly lost $850 million, and in order to cover the shortfall the exchange used funds from affiliated stablecoin operator Tether, according to court files published on April 26th.

NYAG Starts Court Proceedings

The New York Attorney General, Letitia James, has revealed that the court had received court filing alleging that that iFinex Inc. — the operator of Bitfinex — Tether Limited, and their affiliates were in violation of New York law in connection with fraudulent activities, executed without the knowledge New York-based crypto investors.

According to court filings, the exchange hadn’t revealed the loss to investors, with executives of the exchange and Tether engaged in a series of conflicting corporate transactions where Bitfinex got access to up to $900 million of Tether’s cash reserves. Allegedly, Bitfinex took hundreds of millions of dollars Tether’s reserves and subsequently used them to cover up losses as well as its inability to process clients’ withdrawals.

Attorney General James has released a statement that said:

“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds. New York state has led the way in requiring virtual currency businesses to operate according to the law. And we will continue to stand-up for investors and seek justice on their behalf when misled or cheated by any of these companies.”

Following this statement, the court has ordered that both affiliates immediately cease the dissipation of the US dollars that back tether tokens and to hand over documents for the investigation process. It further adds that both companies are prohibited from destroying potentially related documents.

Bitfinex and Tether Riposte

Meanwhile, Tether’s statement, which was a joint statement with Bitfinex, asserts that the court filings “were written in bad faith and are riddled with false assertions”, claiming that the $850 million were in fact not lost, but seized and safeguarded. It further states that both companies are currently working on getting those funds released.

Respectively, both Tether and Bitfinex insisted on having fully cooperated with prosecutors and called on the Attorney General’s Office to “focus its efforts on trying to aid and support our recovery efforts.”

Tether had previously faced a controversy in January of 2018, when critics of Tether alleged that the crypto, which had claimed to have $1 in reserve for every unit of stablecoin issued, was in reality operating a fractional reserve and issuing more tokens than it had backing for, which were then sent to the Bitfinex exchange. Subsequently, both exchanges faced a subpoena from U.S. regulators and after being ordered to undergo an unofficial audit, it was found that stablecoin had the appropriate amount of backing dollars.

At present, the Attorney General is seeking an injunction to compel Bitfinex and Tether to continue trading, in order not to harm the customers of both entities.

Korean Exchange Coinnest Announces Closure

Coinnest, a leading South Korean exchange, and bitcoin trading venue has announced it’s ceasing all operations citing unfavorable market conditions that have hindered its continued growth.

According to a pop-up announcement on its own website, the South Korean crypto exchange Coinnest has shut down, ending all services by the end of June this year.

Coinnest says it has stopped registering new members since April 16th. As of Tuesday it is no longer operating, whilst customers have been advised to start withdrawing any funds held on its platform by April 30th, as the withdrawal process will end in June 2019.

In order to assist the process go smoother, the exchange lowered the fees for withdrawals as well as the minimum withdrawal threshold.

According to news reports, the announcement claims that the South Korean cryptocurrency exchange decided to shut down, as the exchange apparently struggled to deal with the constant changes in the cryptocurrency and blockchain industry, citing unfavorable circumstances:

Since the launch of our platform, all our employees have done their utmost best to render high-quality services to our clients. However, the changes in the crypto markets have made it impossible for us to continue in business.”

Another Coinnest official stated that the decision to shut down came as a natural result of a decrease in trading volume, citing as well regulatory issues and business decisions as reasons which led to this outcome.

Since its launch in 2017, the crypto journey has been everything but smooth for the south Korean exchange platform and its operators. However, last year had been less than favorable for the crypto exchange.

In April 2018, two Coinnest executives had been accused of accepting bribes in exchange for listing crypto assets on the platform, and according to the prosecutors, the executives moved customers’ digital assets into their personal accounts, worth billions of Korean Won. They were both arrested, receiving a jail sentence and a 3 billion Korean won ($2.5 million) fine.

In another series of unfortunate events, Coinnest also lost $5 million in a mistaken airdrop this January. The exchange tried airdropping We Game Tokens (WGT) to its users, however, the entire process went awfully wrong and the exchange ended up transferring millions of won worth of bitcoin (BTC) and other virtual currencies to its clients instead.

Following this announcement, Coinnest has seen just $27,558 in trades over the 24 hours, according to CoinMarketCap. Tron (TRX), cardano (ADA) and BTC accounted for the top three traded coins on the platform, all listed in trading pairs with the Korean won.

Lawsuit Between Winklevoss and Shrem Has Been Settled

Cameron and Tyler Winklevoss‘s lawsuit against fellow early Bitcoin entrepreneur Charlie Shrem has been privately settled. The news was revealed via court files on April 16th.

Judge Jed Rakoff of the U.S. District Court for the Southern District of New York dismissed the case on April 5th, explaining that both parties notified the court they had reached a settlement. However, at that time both parties had been given 30 days to fully effectuate their agreement with the option of continuing to trial in case it was not fulfilled.

On April 16th, attorneys of both parties have signed a legal document, which states that the civil lawsuit is being voluntarily dismissed with prejudice, concluding that the case will not be reopened. It further states that both parties will pay their own legal fees

However, the terms of the settlement remain confidential.

The twins, who founded crypto exchange Gemini, had previously claimed the entrepreneur had stolen 5,000 bitcoins – worth about $26 million at press time – and using the crypto to buy Maseratis, powerboats and other luxury goods, which Shrem had denied.

Following the case’s dismissal, Charlie Shrem has given out a statement regarding the lawsuit:

“From day one, I’ve maintained the allegations are bogus, and they are of course. After their attorney was sanctioned and they were ordered to pay my legal fees twice, we recently reached a confidential resolution, and I’m dismissed from the case. I’m thankful for Brian Klein and my legal team and pleased to have this behind me.”

As one of the earliest adopters of Bitcoin, Shrem established one of the first prominent Bitcoin businesses within the U.S., called Bitinstant.

As previously reported, a judge had ordered the Winklevoss brothers to pay Shrem $45,000 after the District Court of the Southern District of New York reduced the scope of the twins’ claims.

Attorney Stephen Palley, a partner at Anderson Kill has stated that given the big noise with which the lawsuit has started off “this sure ended with a whimper. “

Respectively, Palley strongly believes that „this was a case that began with the plaintiffs trying to freeze and seize Shrem’s assets before he even knew that he had been sued.”

He further commented on how the case began to get worse for the plaintiff’s lawyers as they had seen the ruling overturned as well as having been sanctioned for deposition misconduct. In his opinion, he believes this to be a huge win for Charlie Shrem.