Bitcoin

US Indicts Suspected Russian 'Mastermind' of $4 Billion Bitcoin Laundering Scheme (reuters.com) 74

schwit1 shares a report from Reuters: A U.S. jury indicted a Russian man on Wednesday as the operator of a digital currency exchange he allegedly used to launder more than $4 billion for people involved in crimes ranging from computer hacking to drug trafficking. Alexander Vinnik was arrested in a small beachside village in northern Greece on Tuesday, according to local authorities, following an investigation led by the U.S. Justice Department along with several other federal agencies and task forces. U.S. officials described Vinnik in a Justice Department statement as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011. They alleged Vinnik and his firm "received" more than $4 billion in bitcoin and did substantial business in the United States without following appropriate protocols to protect against money laundering and other crimes. U.S. authorities also linked him to the failure of Mt. Gox, a Japan-based bitcoin exchange that collapsed in 2014 after being hacked. Vinnik "obtained" funds from the hack of Mt. Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, they said in the statement.
Bitcoin

SEC Rules That ICO Tokens Are Securities (vice.com) 96

schwit1 shares a report from Business Insider: On Tuesday, the Securities and Exchange Commission (SEC) said that "ICOs" (Initial Coin Offerings) can sometimes be considered securities -- and as such are subject to strict laws and regulations. For the uninitiated, ICOs are a fancy new way of fundraising enabled by digital currencies like Ethereum -- participants invest money and receive digital "tokens" in return. Thus far, it has been largely unregulated, with some ICO crowdfunding events raising hundreds of millions of dollars -- leading some observers to argue that it is a massive bubble. But the SEC's warning means that this free-for-all may not last forever.

"Going forward, according to the SEC, companies that are issuing tokens as part of an ICO (if they are considered securities) need to register with the commission," reports Motherboard. "This will force companies to comply with regulations that ask them to reveal their financial position and the identities of their management. The SEC also concluded that online exchanges where tokens are bought and traded may have to register as security exchanges."

schwit1 adds a quote from Benito Mussolini: "All within the state, nothing outside the state, nothing against the state."

Security

Fourth Ethereum Platform Hacked This Month: Hacker Steals $8.4 Million From Veritaseum Platform (bleepingcomputer.com) 99

An anonymous reader writes: "Veritaseum has confirmed today that a hacker stole $8.4 million from the platform's ICO on Sunday, July 23," reports Bleeping Computer. "This is the second ICO hack in the last week and the fourth hack of an Ethereum platform this month. An ICO (Initial Coin Offering) is similar to a classic IPO (Initial Public Offering), but instead of stocks in a company, buyers get tokens in an online platform. Users can keep tokens until the issuing company decides to buy them back, or they can sell the tokens to other users for Ethereum. Veritaseum was holding its ICO over the weekend, allowing users to buy VERI tokens for a product the company was preparing to launch in the realm of financial services." The hacker breached its systems, stole VERI tokens and immediately dumped them on the market due to the high-demand. The hacker made $8.4 million from the token sale, which he immediately started to launder. In a post-mortem announcement, Middleton posted online today, the Veritaseum CEO said "the amount stolen was miniscule (less than 00.07%) although the dollar amount was quite material." The CEO also suspects that "at least one corporate partner that may have dropped the ball and [might] be liable." Previous Ethereum services hacks include Parity, CoinDash, and Classic Ether Wallet.
Bitcoin

Ethereum Co-Founder Says Cryptocurrencies Are 'a Ticking Time Bomb' (bloomberg.com) 64

randomErr writes from a report via Business Insider (alternate source): Ethereum, the rival to bitcoin, has been on a tear. Its founders said the latest trend in the cryptocurrency space may not be as good for the cryptocurrency as some might think. Ethereum is up 1,700% over the last year, and that spike has occurred in tandem with the growth of the hottest new trend in fundraising: initial coin offerings. Approximately $1.2 billion has been raised by the new cryptocurrency-based capital raising method this year, according to Autonomous Next, a financial technology analytics service. It is a trend that has sparked excitement across Wall Street. But the cofounder of the company behind the cryptocurrency, Charles Hoskinson, told Bloomberg that initial coin offerings may not benefit Ethereum. "People say ICOs are great for ethereum because, look at the price, but it's a ticking time-bomb," said Hoskinson. "There's an over-tokenization of things as companies are issuing tokens when the same tasks can be achieved with existing blockchains. People are blinded by fast and easy money."
Bitcoin

Hacker Allegedly Steals $7.4 Million In Ethereum After Hijacking ICO (vice.com) 64

An anonymous reader writes: An unknown hacker allegedly took over the website of an ethereum startup called Coindash, directing investors to send money to his or her own ethereum digital wallet, instead of the one controlled by Coindash. While Coindash noticed the hack almost immediately, the damage was done, and the hacker amassed more than $7 million in stolen cryptocurrency.
AMD

Chipmakers Nvidia, AMD Ride Cryptocurrency Wave -- For Now (bloomberg.com) 57

During California's Gold Rush, it was often the sellers of pickaxes and shovels who made the most money. In the frenzy to get rich quick from cryptocurrencies, some investors are calling computer chipmakers the modern-day equivalent. From a report: Shares of Nvidia and Advanced Micro Devices have gained at least 14 percent since the beginning of June, spurred in part by about a 10-fold boom from April to June in a market, known as ethereum, for a currency that can be used to buy computing power over the internet. What's the link between ethereum and these Silicon Valley chipmakers? It lies in the really powerful graphics processors, designed to make computer games more realistic, that are also needed to gain access to encrypted digital currencies. Nvidia and AMD have rallied in the last month and a half even as investors have ignored chip stocks leaving the benchmark Philadelphia Stock Exchange Semiconductor Index up about 1 percent. Nvidia has gained 14 percent and AMD rallied 27 percent. While some of that has come from optimism around new products for other markets, analysts are projecting that sales related to cryptocurrencies will result in a spike in revenue for both companies. Even so, investors shouldn't bank on a lasting impact from the cryptocurrency boom, said Stacy Rasgon, an analyst at Sanford C. Bernstein & Co. "This has happened before," Rasgon said. "It lasted about a quarter." [...] Like bitcoin, ethereum is an attempt by an online community to create an economy that doesn't rely on government-backed currencies. Unlike bitcoin, it's focused solely on offering decentralized computing and storage services. Those seeking to use these services -- and speculators looking for a quick profit by creating and then selling ether -- have seized on graphics cards, which excel at performing multiple simple calculations in parallel, as a faster way to claim the blocks of code that act as the currency of the ethereum market. Demand from ethereum miners has created temporary shortages of some of the graphics cards, according to analysts, who cite sold-out products at online retailers. Estimates of additional sales from this demand run as high as $875 million, according to RBC Capital Markets analyst Mitch Steves. That would roughly equal AMD's total sales from graphics chips last year, or half of Nvidia's quarterly sales of those components. But Steves and other analysts are also quick to warn that the market opportunity could fizzle out.
Bitcoin

Petya Ransomware Authors Demand $250,000 In First Public Statement Since Attack (theverge.com) 59

An anonymous reader quotes a report from The Verge: The group responsible for last week's globe-spanning ransomware attack has made their first public statement. Motherboard first spotted the post, which was left on the Tor-only announcement service DeepPaste. In the message, the Petya authors offer the private encryption key used in the attack in exchange for 100 bitcoin, the equivalent of over $250,000 at current rates. Crucially, the message includes a file signed with Petya's private key, which is strong evidence that the message came from the group responsible for Petya. More specifically, it proves that whoever left the message has the necessary private key to decrypt individual files infected by the virus. Because the virus deleted certain boot-level files, it's impossible to entirely recover infected systems, but individual files can still be recovered. The message also included a link to a chat room where the malware authors discussed the offer, although the room has since been deactivated.
Government

Russia Behind Cyber-attack, Says Ukraine's Security Service (bbc.com) 88

Ukraine says it has discovered who the perpetrators of last week's destructive ransomware attack are. From a report: Ukraine says it has proof that Russian security services were involved in the cyber-attack that targeted businesses around the world last week. The country's security service, the SBU, said it had obtained data that points to a link with an attack on the nation's capital, Kiev, in December. Ukrainian firms were among the first to report issues with malicious software on Tuesday, before the virus spread. Moscow denied any involvement, adding that the allegations were "unfounded". The virus, which disrupted IT systems across the globe, froze computers and demanded a ransom be paid in the digital currency Bitcoin, which is untraceable. Further reading: The Petya Ransomware Is Starting To Look Like a Cyberattack in Disguise.
Security

Hacker Behind Massive Ransomware Outbreak Can't Get Emails From Victims Who Paid (vice.com) 182

Joseph Cox, reporting for Motherboard: On Tuesday, a new, worldwide ransomware outbreak took off, infecting targets in Ukraine, France, Spain, and elsewhere. The hackers hit everything from international law firms to media companies. The ransom note demands victims send bitcoin to a predefined address and contact the hacker via email to allegedly have their files decrypted. But the email company the hacker happened to use, Posteo, says it has decided to block the attacker's account, leaving victims with no obvious way to unlock their files. [...] The hacker tells victims to send $300 worth of bitcoin. But to determine who exactly has paid, the hacker also instructs people to email their bitcoin wallet ID, and their "personal installation key." This is a 60 character code made up of letters and digits generated by the malware, which is presumably unique to each infection of the ransomware. That process is not possible now, though. "Midway through today (CEST) we became aware that ransomware blackmailers are currently using a Posteo address as a means of contact," Posteo, the German email provider the hacker had an account with, wrote in a blog post. "Our anti-abuse team checked this immediately -- and blocked the account straight away.
Security

Ukrainian Banks, Electricity Firm Hit by Fresh Cyber Attack; Reports Claim the Ransomware Is Quickly Spreading Across the World (vice.com) 109

A massive cyber attack has disrupted businesses and services in Ukraine on Tuesday, bringing down the government's website and sparking officials to warn that airline flights to and from the country's capital city Kiev could face delays. Motherboard reports that the ransomware is quickly spreading across the world. From a report: A number of Ukrainian banks and companies, including the state power distributor, were hit by a cyber attack on Tuesday that disrupted some operations (a non-paywalled source), the Ukrainian central bank said. The latest disruptions follow a spate of hacking attempts on state websites in late-2016 and repeated attacks on Ukraine's power grid that prompted security chiefs to call for improved cyber defences. The central bank said an "unknown virus" was to blame for the latest attacks, but did not give further details or say which banks and firms had been affected. "As a result of these cyber attacks these banks are having difficulties with client services and carrying out banking operations," the central bank said in a statement. BBC reports that Ukraine's aircraft manufacturer Antonov, two postal services, Russian oil producer Rosneft and Danish shipping company Maersk are also facing "disruption, including its offices in the UK and Ireland."

According to local media reports, the "unknown virus" cited above is a ransomware strain known as Petya.A. Here's how Petya encrypts files on a system (video). News outlet Motherboard reports that Petya has hit targets in Spain, France, Ukraine, Russia, and other countries as well. From the report: "We are seeing several thousands of infection attempts at the moment, comparable in size to Wannacry's first hours," Costin Raiu, a security researcher at Kaspersky Lab, told Motherboard in an online chat. Judging by photos posted to Twitter and images provided by sources, many of the alleged attacks involved a piece of ransomware that displays red text on a black background, and demands $300 worth of bitcoin. "If you see this text, then your files are no longer accessible, because they are encrypted," the text reads, according to one of the photos. "Perhaps you are busy looking for a way to recover your files, but don't waste your time. Nobody can recover your files without our decryption service."
Bitcoin

South Korean Web Hosting Provider Pays $1 Million In Ransomware Demand (bleepingcomputer.com) 100

An anonymous reader writes: Nayana, a web hosting provider based in South Korea, announced it is in the process of paying a three-tier ransom demand of nearly $1 million worth of Bitcoin, following a ransomware infection that encrypted data on customer' servers. The ransomware infection appears has taken place on June 10, but Nayana admitted to the incident two days later, in a statement on its website.

Attackers asked for an initial ransom payment of 550 Bitcoin, which was worth nearly $1.62 million at the time of the request. After two days of negotiations, Nayana staff said they managed to reduce the ransom demand to 397.6 Bitcoin, or nearly $1 million. In a subsequent announcement, Nayana officials stated that they negotiated with the attackers to pay the ransom demand in three installments, due to the company's inability to produce such a large amount of cash in a short period of time.

On Saturday, June 17, the company said it already paid two of the three payment tranches. In subsequent announcements, Nayana updated clients on the server decryption process, saying the entire operation would take up to ten days due to the vast amount of encrypted data. The company said 153 Linux servers were affected, servers which stored the information of more than 3,400 customers.

Bitcoin

NYTimes: Move Over, Bitcoin. Ether Is the Digital Currency of the Moment. (nytimes.com) 117

An anonymous reader shares a report: The price of Bitcoin has hit record highs in recent months, more than doubling in price since the start of the year. Despite these gains, Bitcoin is on the verge of losing its position as the dominant virtual currency. The value of Ether, the digital money that lives on an upstart network known as Ethereum, has risen an eye-popping 4,500 percent since the beginning of the year (alternative source). With the recent price increases, the outstanding units of the Ether currency were worth around $34 billion as of Monday -- or 82 percent as much as all the Bitcoin in existence. At the beginning of the year, Ether was only about 5 percent as valuable as Bitcoin. The sudden rise of Ethereum highlights how volatile the bewildering world of virtual currency remains, where lines of computer code can be spun into billions of dollars in a matter of months. [...] The two-year old system has picked up backing from both tech geeks and big corporate names like JPMorgan Chase and Microsoft, which are excited about Ethereum's goal of providing not only a digital currency but also a new type of global computing network, which generally requires Ether to use. In a recent survey of 1,100 virtual currency users, 94 percent were positive about the state of Ethereum, while only 49 percent were positive about Bitcoin, the industry publication CoinDesk said this month.
Encryption

Microsoft, Accenture Team Up On Blockchain-based Digital ID Network (reuters.com) 53

Accenture and Microsoft are teaming up to build a digital ID network using blockchain technology, as part of a United Nations-supported project to provide legal identification to 1.1 billion people worldwide with no official documents. From a report: The companies unveiled a prototype of the network on Monday at the UN headquarters in New York during the second summit of ID2020, a public-private consortium promoting the UN 2030 Sustainable Development Goal of providing legal identity for everyone on the planet. The project aims to help individuals such as refugees prove who they are in order to gain access to basic services such as education and healthcare. Blockchain, first developed as a public ledger of all transactions in the digital currency bitcoin, is increasingly being used to securely track data in other fields.
The Almighty Buck

Is Coinbase Closing Accounts For Paying Ransoms With Bitcoins? (coindesk.com) 202

Even as some comparnies are stockpiling bitcoins so they can quickly pay ransom demands, security firms that try paying those ransoms may face losing their accounts on Coinbase. Slashdot reader Mosquito Bites quotes a report from CoinDesk: Less than a year ago, Vinny Troia, CEO and principal security consultant of Night Lion Security and a certified white hat hacker, was sent a compliance form by US bitcoin exchange Coinbase, where he had an account. Coinbase wanted to know how Troia was using bitcoin and his account. "I told them I run a security firm. I pay for ransoms and buy documents on the dark web when clients request it," Troia told CoinDesk. The ransoms Troia helps his clients pay are those stemming from ransomware attacks, which have surged in number over the past few years. Many, like the well-publicized WannaCry attack, are asking for bitcoin.

And the documents? Troia said, "We do breach investigations a lot of times. If a fraudster is saying they're selling my client's stolen documents, the only way to make sure they have what they say they have is to buy those documents." According to Troia, Coinbase "did not like that at all." Coinbase then asked the IT expert whether he had a letter from the Department of Justice giving him permission to do those things. No, Troia said. Upon further research, Troia has not found that any such permission exists. But, "I have my clients authorizing me to do this," he said. Coinbase sent Troia back an email explaining that those actions were against the exchange's rules and shut down his account... "My entire family is blocked from Coinbase," he said.

The Almighty Buck

Venezuelans Flock To Cryptocoins Amid Spiralling Inflation (bloomberg.com) 127

An anonymous reader quotes Bloomberg: Demand for digital coins is soaring in Venezuela amid an escalating political crisis that has protesters demanding that President Nicolas Maduro step down. Inflation has spiraled to the triple digits, debasing the bolivar and depleting savings, while citizens struggle to find everything from food to medicine on store shelves. "If you're going to be in something volatile, you might as well be in something that's volatile and rising than volatile and falling," says Ryan Taylor, chief executive officer of crypto currency Dash Core, the third-largest digital coin by number of transactions... Bitcoin trading volume in Venezuela jumped to $1.3 million this week, about double the amount that changed hands two months ago, according to LocalBitcoins.com...

Venezuela's currency has become nearly worthless in the black market, where it takes more than 6,000 bolivars to buy $1, while bitcoin surged 53 percent in the past month alone. But it's not just about shielding against the falling bolivar, as some Venezuelans are using crypto currencies to buy and sell everyday goods and services, according to Jorge Farias, the CEO of Cryptobuyer.

Bitcoin

Why Ethereum Is Outpacing Bitcoin (venturebeat.com) 150

Even as Bitcoin hits its all-time high, people's interest in other cryptocurrencies hasn't waned, especially Ethereum. But what makes Ethereum popular among some? From an article on VentureBeat: Despite its recent appreciation in value, as a technology, Bitcoin has stagnated over the last three years. Two rival factions have emerged with violently opposing views on what should be done to allow the Bitcoin network to handle more transactions than it can right now. While Bitcoin has been paralysed by indecision, Ethereum has raced ahead with technology that not only does everything Bitcoin can do faster, in higher volume, and at lower cost -- it does a lot more besides. [...] Bitcoin is really only useful as a store of value. Even then, its usefulness for actually transacting value is limited. In a world where people are used to online payments being confirmed instantly, Bitcoin transactions can take anywhere from tens of minutes to several hours, depending on how busy the network is. It's also expensive -- especially if you're only sending small amounts. The average transaction currently costs about $1.50. Ethereum, on the other hand, was never intended as a Bitcoin competitor. Ethereum is actually a platform for new kinds of decentralized (often financial) applications (dApps) that run on a peer-to-peer network of computers. These dApps are designed to disintermediate the kinds of relationships and transactions for which we have traditionally required things like banks, public registries, and the legal system. For technologists, this is exciting stuff, and a vibrant community of software developers has enthusiastically embraced it. Hundreds of projects, startups, and companies at every scale -- including the likes of Intel, Microsoft, and Samsung -- are building software using Ethereum.
Bitcoin

Opioid Dealers Embrace the Dark Web To Send Deadly Drugs by Mail (nytimes.com) 175

Anonymous online sales are surging, and people are dying. Despite dozens of arrests, new merchants -- many based in Asia -- quickly pop up. From a report on the New York Times: In a growing number of arrests and overdoses, law enforcement officials say, the drugs are being bought online. Internet sales have allowed powerful synthetic opioids such as fentanyl -- the fastest-growing cause of overdoses nationwide -- to reach living rooms in nearly every region of the country, as they arrive in small packages in the mail (syndicated source). The authorities have been frustrated in their efforts to crack down on the trade because these sites generally exist on the so-called dark web, where buyers can visit anonymously using special browsers and make purchases with virtual currencies like Bitcoin. The problem of dark web sales appeared to have been stamped out in 2013, when the authorities took down the most famous online marketplace for drugs, known as Silk Road. But since then, countless successors have popped up, making the drugs readily available to tens of thousands of customers who would not otherwise have had access to them. Among the dead are two 13-year-olds, Grant Seaver and Ryan Ainsworth, who died last fall in the wealthy resort town of Park City, Utah, after taking a synthetic opioid known as U-47700 or Pinky. The boys had received the powder from another local teenager, who bought the drugs on the dark web using Bitcoin, according to the Park City police chief.
Bitcoin

What the Hell Is Happening To Cryptocurrency Valuations? (techcrunch.com) 258

The investment category of cryptocurrencies hit a new milestone this week, one that would have been unfathomable just a couple of years ago: $100 billion in combined market capitalization. The break above the 12-digit threshold is largely attributable to bitcoin, which is by far the largest digital currency in the still-nascent category, and which has been on a tear lately. From a TechCrunch article: There is one rational explanation that, if true, would totally justify this rapid increase in price across some of the major cryptocurrencies. And that is, maybe these currencies are actually worth these high prices, and maybe even worth many times more than that at which they are currently trading. But the problem is we have no way to figure out their value. Cryptocurrencies aren't public companies with earnings and expenses and EPS. For example, we can look at Apple's financials and determine its book value -- what the company's assets would be worth if hypothetically liquidated today. Of course, stocks trade at a premium to this, because people are enthusiastic that Apple will continue to perform well and this book value will continue to rise. But we can't do this with cryptocurrencies. We could guess -- and compare it to things like the total money or gold supply in the U.S. For example, if you're someone who thinks of cryptocurrencies as a store of value, the total estimated value of all gold in the world is more than $8 trillion dollars... meaning if bitcoin would ever replace or supplant gold, its current value is pennies on the dollar.
AMD

GPU and Motherboard OEMs Readying Components Optimized For Cryptocurrency Mining (hothardware.com) 77

MojoKid writes: With the popularity of upstart cryptocurrencies like Ethereum on the rise and the value of well-established currencies like Bitcoin steadily increasing, there is new-found interest in cryptocurrency mining. As such, there is another run on AMD and NVIDIA GPUs, which is driving up prices. In an effort to prevent the same kind of GPU shortages that happened in the past, reports have surfaced claiming that AMD and NVIDIA are both readying stripped-down graphics cards, specifically targeting cryptocurrency miners. At Computex, ASRock also announced a new motherboard targeted at cryptocurrency miners, the ASRock H110 Pro BTC+. The ASRock H110 Pro BTC+ is packing 13 PCI Express slots -- twelve x1 slots and one x16 slot -- to accommodate as many graphics cards. ASRock didn't specify pricing or when the H110 Pro BTC+ will be available, however. And the reports that AMD and NVIDIA graphics card for mining will be made available sometime at the end of the June are as yet unconfirmed.
The Almighty Buck

Bitcoin Exchange Coinbase Reportedly Valued At $1 Billion (reuters.com) 72

An anonymous reader quotes Reuters: Bitcoin exchange Coinbase Inc. is in talks with potential investors on a new round of funding at a valuation of more than $1 billion, the Wall Street Journal reported on Friday. It is not clear which investors are committing to the round, which was described as targeting around $100 million or more, the Journal reported, citing people familiar with the matter... Demand for crypto-assets has soared with the creation of new tokens to raise funding for start-ups using blockchain technology. Coinbase said in January it raised $75 million from several major financial institutions including the New York Stock Exchange, USAA Bank and Spanish banking group BBVA.
Though Bitcoins were selling for $892 in January, they've nearly tripled in value over the last five months. Despite the fact that Coinbase "suffered outages" last week, the price of Bitcoin still rose 13.6% over the next nine days to $2561.

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