Mid-term inventory in 2019 (next part): What happened to the encryption industry in the past six months?

In the past two days, it has been more than a push for Bitpush.News to take stock of the huge changes that have occurred in the cryptocurrency market and the blockchain industry over the past seven months compared to the 2017 bull market. In the final article of the mid-year inventory today, we will see cases of regulatory, legal and security aspects of the encryption field over the past six months. Of course, there is also a vision for the future. At present, the industry is generally optimistic, and industry insiders have given forecasts of future bitcoin prices from different perspectives.

Supervision is becoming a shortcoming in the field of encryption

In the past six months, the US Securities and Exchange Commission (SEC) has been in the "storm eye" of cryptocurrency regulation. In the first half of 2019, it repeatedly delayed the decision on the Bitcoin exchange-traded fund (ETF) proposal.

The two ETF proposals submitted last year came from VanEck/SolidX and Cboe BZX, but were withdrawn in January due to the government's long-term closure. Since then, Bitwise and Arca have submitted their own ETF proposals, and VanEck/SolidX has resubmitted the ETF proposal. On May 14, the SEC postponed the decision time for Bitwise's ETF proposal. A week later, the SEC delayed the decision on the ETF proposal for VanEck/SolidX. So far, the SEC has not approved any bitcoin ETF proposals in the United States.

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SEC Commissioner Robert Jackson believes that the Bitcoin ETF will be approved when the encryption market is sufficiently transparent and liquid. SEC Chairman Jay Clayton said, “We have strict rules and regulations to ensure that people do not manipulate the stock market. But these are basically not in the cryptocurrency market. We are working hard to see if we can achieve this. I It cannot be said easily that (cryptocurrency regulation) is like stocks and bonds."

Earlier in April, the SEC issued a cryptocurrency regulatory framework to determine whether digital assets were investment contracts. It's worth noting, however, that the framework is not intended to provide formal legal advice to market participants, but rather as an analytical tool to help issuers of initial coin issuance (ICO) and operators of cryptocurrencies to determine if their products are likely Violation of the federal securities law.

On the international front, the Financial Action Task Force (FATF), an intergovernmental organization dedicated to combating money laundering and terrorist financing, has issued recommendations on cryptocurrency regulation in its 37 member states. In the proposal, the cryptocurrency exchange is required to share customer data information. The FATF's regulatory recommendations require that the Virtual Asset Service Provider (VASP) within the cryptocurrency transaction need to pass the relevant customer's information to the other party when transferring assets. However, it needs to be clear that the FATF's recommendations on anti-money laundering policies are not legally binding. Participating member states need to implement each by enacting laws.

In other countries, the Russian parliament Duma will pass the country's main encryption bill "Digital Financial Assets" (DFA) in July. The authorities have approved separate legislation for the initial issuance of cryptocurrencies, which will become part of the relevant Russian law. The French government passed a financial sector bill in April to establish a legal framework for cryptocurrency service providers and ICO products. The bill includes optional and compulsory licenses, as well as types of funds that can be invested in encrypted assets.

Indian legislators have proposed a draft bill that treats bitcoin and cryptocurrencies as completely illegal. According to the draft bill, anyone involved in the bitcoin or encryption ecosystem will face criminal penalties. This has further worsened the country's encryption environment.

Litigation disputes highlight the chaos of "the extraterritorial land"

 

In the eyes of regulators, the field of cryptocurrency is a "out-of-law". In the first half of 2019, some cases involving encryption were either confusing or could have a major impact on the development of the industry.

The Quadriga CX case is the most suspenseful judicial soap opera in the field of encryption in the first half of 2019. The accidental death of Gerald Cotten, the founder of the Canadian Encrypted Exchange, prevented customers from returning $190 million (approximately $145 million) in cryptocurrency investments. Cotten's widow, Jennifer Robertson, said in court that most of the approximately $190 million in crypto assets were placed in Cotten by a cold wallet that only knew the secret key himself.

In April, regulator Ernst & Young proposed a transfer of the Quadriga CX cryptocurrency exchange from a reorganization process to an insolvency proceeding to “reduce the involvement of professionals and provide stronger investigative powers for trustees”.

On June 20th, Ernst & Young released a heavy report that the exchange's CEO Cotten used the funds of the exchange's clients to create their own accounts in other cryptocurrency exchanges and divert them to private use. The total amount of funds transferred from customers exceeded 2 One hundred million U.S. dollars. In addition, Cotten has created fake accounts on the Quadriga CX with huge fiat currencies of unknown origin, which are used to purchase real cryptocurrencies from customers.

The most widespread lawsuit against the encryption ecology is that on April 25, the US Attorney General (NYAG) office accused Bitfinex of the cryptocurrency exchange of sending $850 million in customer and company funds to payment processor Crypto Capital. Funds from the Tether Reserve were used to cover the deficit, but neither the loss nor Tether’s liquidity was disclosed to the client.

NYAG should file the relevant transaction documents with the company involved and file a ban. At the hearing of the New York State Supreme Court, the judge asked NYAG to conduct a broader investigation of the issue. The fact that the stable currency USDT issued by Tether is not 100% supported by legal currency also raises the question of the encryption community.

The latest development in this case is that the New York Supreme Court judge approved Bitfinex and Tether's request to dismiss the "document request" motion proposed by the Attorney General, and the two sides will continue to hold hearings on July 29. The exchange Bitfinex issued a $1 billion token LEO through the IEO to cover up to $850 million in losses in the case.

In June, the US SEC accused Canadian encryption company Kik of selling unregistered securities worth hundreds of millions of dollars, which may have a profound impact on the future development of the cryptocurrency industry. These securities come from the $100 million first currency issue (ICO) that Kik conducted in 2017. The industry believes that the case is an important industry test case. The case provides an opportunity to conduct a "Howey" test in the digital asset sales environment to determine if it is a security. And may have an impact on the future direction of the cryptocurrency market.

In addition, Mt.GOX, the former bankruptcy case that was hacked, and the controversial case of Craig Wright, who claimed to be “Zhong Bencong”, also had a profound impact on the industry.

Hacker carnival into the largest black cloud in the world of encryption

 

In the first half of 2019, with the recovery of the encryption market and the soaring prices of major cryptocurrencies such as Bitcoin, the activities of encrypted hackers have become increasingly rampant. As Mark Yusko, founder of the capital management company Morgan Creek, said, “People don’t steal valuable things.”

In the hacking incidents of the past six months, the most striking thing was that on May 7th, the main crypto exchange currency was hacked, and the total loss of the currency was about 40 million US dollars. In this attack, the hacker waited patiently after discovering the system security vulnerability until the system had a large transaction. In the end, the company took all the losses and successfully responded to the crisis after a week of suspension and system upgrades. In this incident, the encryption community has helped the currency on all platforms. Analysis teams such as Peck Shield and Whale Alert also helped to analyze the whereabouts of the funds, and even some companies that were seen as "competitors" by the outside world also extended their help. Zhao Changpeng, CEO of the currency security company, said, “In the long run, this may actually be a good thing for us. There is no end to security, there is always room for improvement.”

Not all cryptocurrency exchanges can recover from hacking incidents. Cryptopia, the New Zealand exchange, suffered a $16 million hacking attack in January, before entering the liquidation process and suspending trading operations. Although it restarted trading services in March, there are still serious banking problems.

In addition, Singapore's exchange DragonEx was also hacked on March 24, losing more than $6 million worth of digital assets. On February 15, Israel’s cryptocurrency exchange, Coinmama, suffered a data breach. The email and password information of 450,000 users registered before August 5, 2017 was stolen.

The hacker object has an encrypted wallet in addition to the cryptocurrency exchange. The cryptocurrency wallet service GateHub has been hacked to leak nearly 100 XRP Ledger wallets. As of June 5, approximately 80,000 victims, 23,200,000 XRP (released for nearly $9.5 million) were stolen. Bitcoin wallet Electrotum suffered a continuous denial of service (DoS) attack on its servers in April. The damage caused by the attack was estimated to be millions of dollars, and one of the users lost about $140,000.

For the cryptocurrency sector, security is an advantage that it has always advertised as compared to a centralized legal currency. However, the facts show that at this stage, the security protection system in the encryption ecosystem needs to be established, which is also a major obstacle to the development of the encryption field.

The future battle, rose to the moon or rose to Mars?

 

After the downturn in the first quarter of 2019 and the soaring in the second quarter, the current mood in the encryption industry is generally optimistic. Analysts believe that the main cryptocurrency represented by Bitcoin is long-term bullish, both in terms of fundamentals and market indicators. Although Bitcoin may be back and forth before creating new historical highs, there may be more breakthroughs in the long run.

Mike Novogratz, CEO of cryptocurrency bank Galaxy Digital, predicts that Bitcoin will reach an all-time high of $20,000 in the next 18 months. The industry believes that the driving factors include institutional entry, improved network infrastructure, halving bitcoin block rewards and macroeconomic conditions.

Fundstrat co-founder Thomas Lee believes that once Bitcoin breaks through $10,000, it will soar to $40,000 in five months. Because breaking through $10,000 will be the real sign of the arrival of "False Lost Fear" (FOMO).

BitMEX CEO Arthur Hayes predicts that bitcoin prices may reach at least $50,000 in the next two to five years. According to the Wall Street Journal, a trader also set the execution price of the bitcoin call option to $50,000.

eToro analyst Simon Peters believes that the price of Bitcoin can reach an all-time high of $20,000 in a short period of time, and may reach $50,000 or $100,000 by the end of 2019.

An analysis of the inventory-to-traffic ratio of key indicators in Bitcoin shows that the price of Bitcoin is expected to reach an astonishing $60,000 in August 2020. In May 2020, the “half of block rewards” will continue to push up this indicator and drive up prices.

Enthony Pompliano, founder of the encryption company Morgan Creek, said in a blog post that "bitcoin can reach $100,000 by the end of 2021." By then, the market value of Bitcoin will reach 2 trillion US dollars, but still less than 1/3 of the gold market value, less than 1 / 40 of the global money supply.

Encrypted investor Tim Draper said in an interview that bitcoin prices in the four years or $250,000 would account for 5% of the global market.

When Mark Yusko, CEO and co-founder of Morgan Creek, was interviewed by Bitcoin magazine, Yusko believed that the price of Bitcoin could reach between $300,000 and $400,000.

Bitcoin supporter Max Keiser also believes that Bitcoin will reach the target of $1 million. Supporting this prediction is also the senior cryptographer John McAfee, who predicted in November 2017 that Bitcoin will reach $1 million by the end of 2020.

Perhaps there are more exaggerated and bold predictions about the price of Bitcoin and the cryptocurrency market. We will wait and see what will happen in the future.

[Click here to read the 2019 mid-inventory (first)]

[Click here to read the 2019 mid-point (middle)]

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By Liang CHE

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