Tag: coronavirus

News: COVID-19 shuts down crypto conferences, Libra activates plan B, investor sues bitcoin miner Canaan

Good news this week. I’ve started freelancing for Decrypt. I’m in their Slack channel, and it’s nice to feel part of a group again. That and a few freelance gigs mean I’m less freaked out about making ends meet after leaving my last gig. Although now, I’m worried about COVID-19 and its impact on crypto media and the world economy as a whole.

This newsletter is going to be a bit different. I’m going to focus on the bigger stuff—or things that are interesting to me while supplementing them with additional notes or thoughts I might have—and then list off a bunch of other news that has caught my eye.

Coronavirus, crypto conferences, and the hell to come

I wrote a blog post about how the new coronavirus is impacting crypto conferences. My story even got picked up in Charles Arthur’s Overspill newsletter. (He’s a former tech writer for The Guardian.) In a week’s time, things have only gotten worse, with more events canceling. The city of Austin has canceled SXSW, which had a blockchain track. MIT issued an official statement Thursday night that is was canceling any event larger than 150 people but somehow made an exception for the MIT Bitcoin Expo, March 7-8.

What’s shocking is that the school did this despite knowing the dangers—more than two dozen cases of COVID-19 in Massachusetts have been linked to a Biogen meeting in Boston with 175 attendees in late February. The news of this started coming out on Thursday, the very day MIT gave the green light for its expo. Even on Saturday, Boston Blockchain Week, scheduled for March 7-13, removed all events from its calendar.  

Digital Chambers has postponed its DC Blockchain Summit, originally scheduled for March 11-12. Bitcoin Magazine has postponed its Bitcoin 2020 event, March 27-28.

Coindesk has made it clear that it is absolutely not canceling its New York City-based Consensus conference until it is forced to do so. The event, scheduled for May 11-13, drew in 4,000 people last year and 8,500 the year before. Here’s the refund policy:

“If Consensus is cancelled due to guidance from health organizations and local/federal governments, attendees will receive a full refund on their ticket purchase within 60 days of CoinDesk making the announcement to cancel. Further, if an attendee is unable to attend because his or her home country is barred from traveling to the United States, we will also issue a full refund within 60 days.”

South Korea, China, US step up efforts to disinfect dirty fiat

The new coronavirus can live on paper money, says the WHO, so South Korea’s banks are taking banknotes they receive and putting them through a heating process to kill off any germs. China is doing something similar. And now the U.S. is taking any U.S. dollars that it gets from Asia, disinfecting them, and keeping them for 7-10 days before reintroducing them to the financial system. It is routine for banks to disinfect banknotes, but now they are stepping up the process. Bitcoin is a contactless form of payment, but unfortunately, you can’t buy toilet paper, rice, beans or baby formula with it. (Decrypt, Reuters)

Baseline protocol: coaxing the enterprise to use public Ethereum

The Baseline Protocol is a thrilling new enterprise blockchain initiative from ConsenSys, EY, Microsoft, and a handful of other projects looking to sell consulting hours.

In short, the initiative is an effort to get big companies to use the Ethereum public blockchain. Baseline is supposed to serve as a middleware with its secret sauce being privacy-preserving zero-knowledge proofs. ZKP is key because otherwise, why would companies want to put their private dealings on a widely shared blockchain?

But what actually goes on the blockchain? The answer: not a lot, and certainly not any actual documents. What goes on the blockchain is a hash of the file you share via some other means along with a timestamp, so you can check the authenticity of the document. ZKP serves to hide the transaction of tokens and business logic in smart contracts.

A German company called Unibright plans on playing “a major role” in developing Baseline. Interestingly, Unibright has its own token (UBT), which had a big pump recently. UBT couldn’t get listed on any major exchanges. Instead, it is traded mainly on the Estonia-registered Hotbit and decentralized exchange IDEX. (Decrypt, David Gerard)

Reggie Fowler pleaded not guilty to wire fraud

Arizona businessman Reginald Fowler flew from his home in Chandler, Ariz., to stand before a judge Thursday and plead not guilty to a new charge of wire fraud. He now faces five counts and plans to go to trial next year. Yes, that’s right. His trial date, originally scheduled for April 28, has been moved to Jan. 11, 2021, because his lawyers need more time to prepare for the case. Until then, he remains free on bond. (My blog.)

How did bitcoin mining maker Canaan get listed on Nasdaq?

That’s like, such a good question. Bitcoin mining machine maker Canaan Creative operates out of China. Last year, it became the first crypto company to be listed on the Nasdaq. Woot! But after an unexplained pump in February, the stock tanked. And then on Wednesday, Phillippe Lemieux, an investor in Canaan, filed a class-action lawsuit against the company, saying Canaan misled investors. Some of the most damning information in the suit comes from a blog post by Marcus Aurelius, or MAV, titled “Canaan Fodder.” Canaan had three prior unsuccessful attempts to list on Asian exchanges. MAV calls the Nasdaq listing a “dumping ground of last resort.” I’m sure CAN stockholders will be happy to hear that. (Decrypt)

UK’s FCA issues warning about Bitmex

U.K.’s financial watchdog, the Financial Conduct Authority, is warning Brits about Bitmex. Arthur Hayes’ bitcoin derivatives platform is promoting its services without authorization, the regulator said. Bitmex said it is trying to “assess” the situation.

The FCA issued a similar warning about Kraken, but that was soon taken down. Kraken CEO Jesse Powell said the regulator made a mistake and fixed it. “Seems like it might have been some scams pretending to be Kraken got reported,” he told Decrypt. (Decrypt)

Libra activates plan B

Plan B vs plan AFacebook’s Libra may issue multiple coins based on national currencies in addition to its original idea—a coin based on a basket of assets. If it does that, it’ll be just another PayPal, but on the Calibra wallet.

Bloomberg and The Information were the first to report on the news, and the financial press followed, all linking back to these stories. (The Information originally said the national coins would replace the original Libra token but has since issued a correction, stating that the national coins would run alongside the Libra token.)

This is not a new plan at all. David Marcus and Mark Zuckerberg talked about doing this back in October. In terms of technology, there’s no innovation here either. The big hurdles for Libra are proving to the world that it can comply with anti-money laundering laws. And so far, it hasn’t been able to do that. (Decrypt, David Gerard, Bloomberg, The Information)

Other stuff that caught my eye

“If they’re not outright scams, they’re normally cash grabs.” One former coiner describes his experience working for crypto projects. (Medium)

Looks like Massive Adtoption’s Jacob Kostechki has exited the crypto world and gone into real estate. He’s now tweeting under @_jake_i_am.

Haseeb Qureshi, a managing partner at crypto venture fund Dragonfly Capital, wrote a good article describing how flash loans work. Flash loans were behind two recent hacks—one for $350,000 and another for $600,000—of margin trading protocol bZx. (Medium)

More info coming out on who invested in Telegram’s $1.7 billion initial coin offering: A Russian oligarch, a former cabinet minister and the COO of Wirecard. (Coindesk)

In April 2018, The Reserve Bank of India banned banks from doing business with crypto companies. On March 4, India’s crypto community rejoiced as the country’s Supreme Court ruled that the RBI’s ban was unconstitutional. The RBI plans to fight the ruling. (Economic Times, Cointelegraph)

The hostile takeover of the Steem blockchain is comedy cold for nocoiners. (Twitter thread)

Stephen Palley offers his take on the Feb. 26 ruling in the Ripple lawsuit: His most ooph worthy comment: If the court’s reasoning is accepted, “purchasers of crypto on secondary markets can state securities claims against the issuer where they did not directly purchase the crypto.” (Twitter thread, court order)

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Posted on by Amy Castor 0

Coronavirus: Will crypto conferences survive? What about crypto media?

Novel coronavirus is a real threat. We now know the incubation period for COVID-19 is up to 14 days, and people can spread the disease without showing any symptoms at all. The best way to keep from getting ill is to avoid close contact with other people. Ultimately, that means cutting back on air travel and opting out of large events. 

As a result, companies in all fields are canceling conferences in droves. They either can’t sell enough tickets or too many sponsors and speakers are starting to pull out. In some cases, entire cities are outright banning large indoor gatherings.  

Last week, Facebook canceled the in-person part of its F8 developer conference in San Jose, originally scheduled for early May. In 2019, more than 5,000 people attended F8.

Nvidia said Monday that it will not hold its GTC 2020 conference that had been scheduled for March 22-26 in San Jose. As many as 10,000 attendees were expected at the event, which centered around semiconductors, graphic chips, and AI technologies.  

Also, on Monday, Facebook and Twitter pulled out of SXSW Conference & Festivals, a sprawling 10-day event in Austin set to kick off on March 13. The event drew more than 400,000 attendees last year. SXSW says the event is still going as planned, even though an online petition is in the works to cancel it.  

Similarly, the crypto world is feeling the pain. Tron has postponed indefinitely its Nitron Summit due to coronavirus concerns. The event was scheduled to take place between Feb. 29 and March 1 in Seoul, South Korea.

Paris Blockchain Week, originally set to kick off on March 31, is postponed until December. Even that is risky, though. December is when the cold and flu season starts up again, and a coronavirus vaccine isn’t due out until sometime in 2021.  

How will crypto media fair?

Coindesk Consensus 2018
Consensus 2018 was a massive event. People waited in long lines to register.

If the trend continues — and likely it will — conference cancellations could hit some crypto media publications hard. I’m talking about Coindesk in particular. The company pulls in 85% of its revenue from conferences, according to a May 2019 report in The Information. Coindesk doesn’t feature ads on its site anymore, so events are its bread and butter.

It hasn’t always been that way. I remember ads for every bottom-of-the-barrel initial coin offering on the site a few years ago. I’m not sure why Coindesk stopped serving ads, but they seem to have completely disappeared from the site after its relaunch in November. 

Last year, Coindesk held one investor event in New York and another in Asia. But its flagship conference is Consensus. Held annually in Manhattan, Consensus is widely considered the most significant event in the cryptosphere, accompanied by lots of satellite conferences around the same time. This year, Consensus is scheduled for May 11-13 at the New York Hilton midtown.

In 2018, just coming down from the peak of the crypto hype cycle, Consensus drew in more than 8,500 attendees, each paying about $2,000 per ticket. Coindesk’s total revenue for the year was $25 million, so do the math — that’s $21 million in events alone. 

Consensus 2019 saw less than half that with only 4,000 attendees. But even at an estimated $10 million in revenue, that’s still a decent amount of money. Despite the drop-off, Kevin Worth, Coindesk’s CEO, told The Information that Digital Currency Group, which owns 90% of Coindesk, still planned on growing its media business.

Indeed, Coindesk has been on a bit of a hiring spree. Almost anyone who has been writing about crypto has gotten pulled into working for the media outlet. It will be interesting to see what happens if Coindesk ends up having to cancel Consensus 2020 and potentially even Consensus 2021 — or even if it sees a significant drop in attendees.

Oddly, Consensus is the only event listed on the Coindesk’s website at this time. The company’s other two events — “Invest: NYC” and “Invest: Asia,” as they were called last year — are conspicuously missing. I reached out to Coindesk this morning. If they respond, I’ll post their comments here.

Other media pubs also rely on events for revenue, though not to the extent that Coindesk does, and their events aren’t nearly so huge. 

Breakermag started planning an NYC event called Breakercon before it shuttered in 2019. The Block took over the event renaming it “Atomic Swap.” This year, The Block is now calling the one-day-event, scheduled for May 12, The Block Summit. Tickets cost about $800 and CEO Mike Dudas expects things to go as planned with 400 attendees.

Last year, a leaked investor pitch deck for The Block indicated that of the $5 million the startup wished to see in 2020, $3.4 million will come from subscription revenue; $1.1 million will come from ads and $500,000 from events. At least The Block has its revenue model spread out a bit, so it’s not so heavily dependent on a single event. 

Decrypt relies on Ethereum venture studio Consensys’ patronage to keep its doors open. Consensys holds an Ethereal Summit each year in New York City right before Consensus. That also appears to be on track for May 8-9.

Cointelegraph has a separate events division that does BlockShow Asia, which it’s been holding since 2016. This year the event is scheduled for Singapore in November. The outlet, which claims 6 million visitors a month, also makes money on ads and consulting.

My guess is that as the coronavirus spreads, we’ll see more crypto events being canceled. Some conferences are opting to go the “decentralized” route and put everything on video, but I just don’t see that being too popular. Most crypto people go to conferences to network and party — the talks, not so much. 

A bigger threat: Crypto ice age

The bigger problem here is the crypto ice age, a term that refers to the general slowdown in the space that set in after 2017 due to increased regulation and the plunge in the price of bitcoin. As David Gerard details in a recent blog post, crypto media publications and low-end blogs are now collectively chasing an ever-shrinking pool of ad funds.

In general, the media advertising model has gone the way of the dinosaur. Subscriptions work for some publications. But big outlets like the New York Times and the Wall Street Journal who employ the model successfully have hundreds of thousands of readers. The crypto world simply does not have that big of a following.

Events are a big deal for many crypto pubs, and if that important revenue stream dries up, it could push some outlets to the breaking point. Expect more layoffs in 2020 with some crypto pubs and blogs falling off the map completely.

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Posted on by Amy Castor 0

News: Crypto Fyre Fest collapses, Virgil Griffith pleads not guilty, lawyers push to exhume body of Quadriga’s dead CEO

Only three weeks to go before David Gerard and I meet up together in Vancouver for work on a QuadrigaCX documentary. I hope the jet lag doesn’t take too much out of him. (He’s traveling from London.) I want to see what happens when he has a few drinks.  

Massive Adoption
(Photo: @crypt0fungus)

The comedy gold medal of the week goes to Massive Adoption, a bitcoin conference that’s now being called the Fyre Festival of crypto because of the packages sold. Jacob Kostecki promised roundtrip flights, hotels and parties for $300-$400. In a shock to all (note the sarcasm), he called the whole thing off. But don’t worry, your refunds are coming. It may take months, but they’re coming. Promise. I swear. So sorry about all this.

David Gerard was the one to originally report on #CryptoFyreFest. I wrote two stories for Modern Consensus on the topic. You’ll find them here and here.  

Our friend Jacob appears to have alienated more than a few casual strangers on the internet. His own brother Jedrek has been speaking out about him on social media. According to Jedrek, Jacob has left a trail of debt and broken promises behind him. And yes, Jacob confirmed to me in a DM that Jedrek is indeed his brother.

Jacob’s behavior reminds me a bit of Gerald Cotten’s when he was running HYIP schemes on TalkGold: Collect people’s money, and then later, tell them the scheme/event has collapsed. Blame it on something external to your control. (Jacob, for instance, is now pointing fingers at everyone, even me.) Apologize profusely and start issuing refunds in good faith, but slowly and over a long period, until people finally give up and go away. 

Also, I can’t help but notice the strong resemblance of the Massive Adoption logo to that of this media consultancy firm.

Virgil’s pot of gold?

Virgil Griffith, former head of special projects for Ethereum Foundation, pleaded not-guilty on Thursday to conspiring to violate the International Emergency Economic Powers Act. He flew to New York from his parent’s house in Tuscaloosa, Ala., to enter his plea. I guess this means he is planning to go to trial? I have to wonder where all the money is coming from. Brian Klein, Griffith’s high profile L.A. lawyer, has made several trips to New York and these legal services don’t come cheap. Griffith’s parents and sister have already put up $1 million for his bail. 

Telegram’s ICO investors surface

The SEC alleges that Telegram ran a scheme whereby wealthy investors—including several Silicon Valley heavyweights—would get tokens at a steep discount, then dump them on crypto exchanges to bilk retailers. More of those possible investors are now surfacing in court docs. As reported in CoinDesk, they may include:

QuadrigaCX

The law firm representing QuadrigaCX’s former users are nudging the RCMP to dig up the corpse of Gerald Cotten, the exchange’s dead CEO, to make sure it’s really him and not some random dead guy from India. Everybody is mouthing the word “exit scam,” and this is likely the easiest way to find out. Of course, if the body is exhumed and it’s not Cotten, you can expect a Netflix series soon. (My story in my blog.)

Also, Quadriga’s fifth trustees report is out. Basically, it says that big four accounting firm EY, the collapsed exchange’s court appointed trustee, spent half a million U.S. dollars on fulfilling law enforcement requests in the second half of 2019. The small pile of what’s left of Quadriga creditor’s money continues to shrink. (My story in my blog) 

Reggie Fowler and the mysterious sealed document

Alleged Bitfinex money mule Reginald Fowler was supposed to plead guilty to one count and have the other three counts dropped. But something weird happened when the Arizona businessman stepped before a New York judge on Jan. 17. According to Bloomberg, Fowler was supposed to surrender ~ $371 million in more than 50 accounts. The deal fell apart when he only agreed to forfeit whatever was in the accounts.

Now, according to a Jan. 31 court filing, the U.S. Government has officially withdrawn its plea offer. Nobody knows the full details of what happened that day, but a mysterious sealed document, which appeared in his court filings on Jan. 30, might contain some clues. His trial begins April 28. 

Screen Shot 2020-02-02 at 3.09.31 PM

Spammers gonna spam

In part two of “Decred fires its publicist because Ditto PR could not get the altcoin project a Wikipedia page” David Gerard, who happens to be a longtime Wikipedia administrator, fires back. He wrote an entire blog post calling Ditto out on their no-coiner conspiracy claims. (Ditto originally alluded to Gerard in saying that “a few influential no-coiners have admin power and are intentionally censoring crypto pages.”) He also wrote an article on Wikipedia Signpost, where he talks about the “ongoing firehose of spam” Wikipedia has had to put up with following the 2017 crypto bubble.

Wikipedia has set rules governing what stays up on the site and what gets taken down, and those rules have nothing to do with the site’s administrators. Ditto should know this, as opposed to hiding behind some mad-capped nocoiner conspiracy theory.

Bakkt is a ghost town

The hope was that bitcoin options would lure institution money into the space and send the price of bitcoin through the atmosphere. The unfortunate reality is that literally, no one is trading Bakkt’s bitcoin options. (The bitcoin futures exchange is governed by the Intercontinental Exchange, the owners of the New York Stock Exchange.)

In the last full trading week of January, not a single bitcoin options contract was traded on Bakkt, Coindesk reported. Bakkt launched the first regulated bitcoin options contract on Dec. 9, having rolled out a cash-settled futures and physically settled futures in November and September, respectively. 

Other news

Chainalysis released a report on criminal uses of cryptocurrency in 2019. As long as you overlook some of the marketing fluff—e.g., 60 million Americans bought bitcoin last year—there’s some interesting takeaways. Like the bit about how crooks seem to cash out their bitcoins via over-the-counter trades going through Binance and Huobi. And how, for the first time in Bitcoin’s history, black market sales in crypto surpassed $600 million last year. (See my story in Modern Consensus.)

There’s been more than one news report claiming coronavirus is good for bitcoin. This is utter nonsense. The reason the price of bitcoin goes wildly up and down is because the markets are thinly traded, making them easy to manipulate. Literally, every time there is a crisis happening somewhere in the world, bitcoiners claims that’s good for bitcoin. 

Far right website @Zerohedge had their Twitter account suspended. They always post wild stuff, but apparently, they crossed a line. Buzzfeed said the site claimed without evidence that a scientist at the Wuhan Institute of Virology created the strain of the virus that has led the World Health Organization to declare a global health emergency.  

Bitcoin core developer @LukeDashjr weirdly commented on Twitter that “Masturbation is a very grave sin, arguably even worse than murder.” I thought he was joking, but apparently, /r/buttcoin has an entire collection of his bizarre quotes.

(Updated Feb. 3 at 9 a.m. ET with a few more details on Fowler.)

 

 

 

 

 

 

Posted on by Amy Castor 0