Another shakeup inside Canaan Creative leads to 4 execs ouster

Amid online rumors of internal strife amongst company leadership circles over long-term direction, ASIC hardware manufacturer Canaan Creative reportedly removed four executives from its listing last week.

Co-Chairman Kong Jianping, Non-Executive Director Sun Qifeng, Founder and CFO Li Jiaxuan, and Public Affairs Director Tu Songhua were removed from the publicly listed company's registry according to changelog entries on July 6, 2020. The business registry now lists company CEO Nangeng Zhang as the organization's sole director.

The registry still lists both Kong and Li as part of Canaan's "core team." Zhang was given the new official role of executive director and general manager, dropping the chairman title. Canaan added Meng Lu as the new supervisor.

Canaan has not commented publicly on the reasoning behind the abrupt change to the listing of these senior executives. Chinese media outlets were swift to point out the parallels between the internal power struggles at Canaan with the bitter infighting at rival Chinese hardware manufacturer Bitmain Technologies Ltd.

The latter has had no shortage of controversies as co-founders battle publicly over control of the company.

In both situations, the CEO removed a company founder from a public leadership position within the organization because of disputes over internal management and the company's long-term strategy. This recent dust-up at Canaan follows reports from earlier this year in February when Xiangfu Liu resigned from his role as a board member over disputes with the firm's strategy. Liu was one of the three co-founders of Canaan.

The company has yet to publicly file paperwork with the U.S. Securities and Exchange Commission (SEC), acknowledging the management restructuring. The removal comes during a time where the company's NASDAQ share price is down significantly since the BTC halving event.

If rumors are right, it might indicate Canaan's CEO started to believe his own spin to the point he's having trouble recognizing when some ideas aren't good and shouldn't be pursued. Power struggles often arises when leaders struggle to adapt when they encounter contradictory evidence. They then tend to ignore evidence that conflicts with their worldview and seek proof that agrees with it.

Whether this upheaval is a precursor to Canaan's imminent meltdown or a hiccup as it rights itself towards a wise business strategy remains to be seen. If financial losses start to mount, it will reunite shareholders with their conscience forcing even more changes at the struggling hardware giant.

The block reward mining world is about to reset itself. Canaan would be wise to stay ahead of the curve. 

FBI called to probe Twitter amid fears of future hacks

The FBI is leading an investigation into the July 15 Twitter hack, in which 31 high-profile Twitter accounts were compromised by a hacker and used to promote a digital currency investment scam.

According to Reuters, U.S. lawmakers that are concerned about future attacks on Twitter prompted the FBI's investigation.

"While this scheme appears financially motivated…imagine if these bad actors had a different intent to use powerful voices to spread disinformation to potentially interfere with our elections, disrupt the stock market, or upset our international relations," said U.S. Senator Ed Markey.

The hacker had the ability to take over any Twitter account, yet, used their power to promote a digital currency scam. The scam consisted of the hacker telling the millions of followers of the compromised accounts to send them digital currency, promising to send them double the amount that they were being sent.

However, it was a scam—the attacker did not send double the amount of digital currency to any of the individuals who participated. The attacker currently has a total of 7.411 BTC across the three wallet addresses they used to scam others (address 1, address 2, and address 3).

Timeline of attack
The hacker's first account takeover occurred at 2:16 p.m. EST when the hackers compromised @AngeloBTC, a well-known BitMEX trader's Twitter account.

In their first account takeover, the hackers requested that AngeloBTC's 150,000 followers send him a direct message, and send 0.1 BTC so that they could join his private Telegram group. However, there was no private Telegram group, and sender's got scammed out of their money.

Shortly afterward, the attacker began targeting Twitter accounts associated with well-known companies, executives, and celebrities, such as Apple, Jeff Bezos, and Kanye West.

Ultimately, the hacker was able to broadcast their digital currency investment scam to tens of millions of users and rake in more than $100,000.

We got lucky
We were honestly lucky that all the hackers did was promote a digital currency scam. Imagine if they used the compromised accounts, such as that of former U.S. President Barack Obama, or former Vice President Joe Biden, to start some sort of political conflict in which a foreign country retaliated.

When you consider all of the things the hacker could have done with the power that they had, it becomes concerning and alarming that they were able to breach Twitter in a way that gave them this power. That being said, it makes sense that the FBI is investigating Twitter, because if this were to happen again who knows what would happen.

Japan’s blockchain industry grows by 30% in 2020

Japan's blockchain industry has been growing rapidly in 2020 despite the economic struggles and the global pandemic. A new report by one of the country's largest digital currency companies revealed that the sector has grown by over 30% since 2019.

Japan has been a trailblazer in the blockchain industry for years, being one of the first countries to formulate and implement a regulatory framework for the industry. Its blockchain-friendly approach has led to a rapid growth of the industry, a new report now shows.

In the past year, the industry has grown by 30%, the report by the Monex Crypto Bank showed. The bank is a subsidiary of the Monex Group, the operator of Coincheck exchange which it acquired in 2018.

The report revealed that as of May this year, there were 430 blockchain companies in Japan. This is a 30.7% rise from the 329 companies reported in July last year.

64% of these companies focus primarily on blockchain technology, the report showed, with the rest being involved in a secondary capacity. The report further revealed that blockchain technology is not limited to startups, with 193 of the companies being labeled as large corporations. Of these, over half focus primarily on blockchain technology.

Moreover, there are 31 publicly-listed companies in Japan that are pursuing blockchain technology.

On the available blockchain products, the study found that finance had the highest share, accounting for 19% of the 422 active products. Entertainment accounts for 10%, with service, infrastructure, real estate and retail all accounting for less than 3%.

The digital currency exchange and mining sectors are still the biggest in the industry, the report notes. However, the gaming sector is quickly rising to prominence, using blockchain to change the experience for both the operators and the gamers.

While the Japanese blockchain and digital currency exchange industry has come a long way, it still faces challenges that have hindered its growth. Hacks and data breaches have been one of its biggest threats.

Zimbabwe central bank halts mobile money transactions

Zimbabwe's currency struggles don't seem to be coming to an end any time soon. In the latest update, the Reserve Bank of Zimbabwe has announced a ban on mobile money transactions. According to the regulator, mobile money operators have been taking advantage of the financial instability to overcharge the users.

Zimbabwe has been undergoing a currency crisis for the better part of the past two decades. The Southern African country has tried a number of solutions, from banning the local currency to using the U.S. dollar and introducing bond notes as a surrogate currency. However, none of them has given the country the monetary stability that the people so desperately need.

In its latest effort, Zimbabwe's central bank has cut off one of the most widely used payment methods. A majority of Zimbabweans have turned to mobile money for day-to-day transactions due to the shortage of cash in the banks. However, according to the regulator, the mobile money operators have been exploiting the people and overcharging them.

In its press statement, the bank announced that it had suspended all mobile money agents. It also suspended all bulk payer transactions as well as merchant transactions, except for utility payments.

Story from Markets Outflow of Bitcoin From Miners at Lows Not Seen Since 2010

Miner outflows of bitcoin have dropped to decade lows, with analysts suggesting a hoarding mentality is partly responsible.

The seven-day average of the total amount of bitcoin transferred out of miners' addresses declined to 987 on Thursday, hitting the lowest level since Feb. 3, 2010, according to data source Glassnode. The previous decade low of 988 was registered on May 23.

glassnode-studio_bitcoin-miners-outflow-volume-7-d-moving-average
Source: Glassnode
The number of coins being sent by miners to exchanges is also at its lowest point in over a year, as noted by Glassnode in its weekly report.

"It is a sign of efficient miners continuing to hoard (only selling a proportion of BTC)," said Asim Ahmad, co-chief investment officer at London-based Eterna Capital.

The increase in miner holding does not necessarily have long-term bullish implications for the cryptocurrency's price. Miners tend to operate mainly on cash and liquidate their holdings almost on a daily basis to fund operations.

As such, miner hoarding could be termed as temporary deferral of BTC sales, possibly due to fears that the market lacks the strength to absorb the regular amount of supply. Essentially, they may be waiting for the market to show strength and prices to rise before realizing their profits.

The market, therefore, could face an above-normal miner supply during the next meaningful price rise. That, in turn, could put the brakes on a price rally.

Hoarding aside, the other main reason for the decline in outflows is the reduction in bitcoin being mined since May's reward halving, said Ahmad.

Indeed, transfer volume from miner addresses fell from 2,334 BTC to 1,034 BTC in the nine days following the May 11 reward halving, which reduced the per block emission by 50% to 6.25 BTC.

That sharp decline in profitability forced out less inefficient miners, as evidenced by a drop in the seven-day average of the hash rate – the total computing power dedicated to mining blocks on the blockchain. That fell from 120 tera hashes per second (TH/s) to 90 TH/s in the two weeks following halving (though it's since climbed as more efficient machines were switched on).

Forced out miners, however, may return to bitcoin's blockchain if prices rise sharply, making older hardware once again profitable.

Bitcoin is currently trading largely unchanged on the day near $9,370, according to CoinDesk's Bitcoin Price Index.

The cryptocurrency has been largely restricted to a narrow range of $9,000 to $10,000 since mid May. The direction in which the range is breached will likely set the tone for the next big move. 

New York Times blockchain has a long way to go

The New York Times believed that blockchain technology could serve as a solution to fight fake news and disinformation. They admired that a public blockchain could serve as a shared source of truth and that could be referenced if there was a piece of news or a photograph, whose origin or legitimacy was questionable.

In July 2019, The New York Times unveiled News Provenance Project—an initiative that used blockchain to fight misinformation. However, after a year of research and development, the News Provenance Project team admits that they are still very far away from having a fully functional product that is ready for the world.

"This prototype was an experiment that taught us a lot about the power of credible, contextual information in social media feeds, but there is a long way to go before something like this can be fully realized," said Pooja Reddy, a product manager at The New York Times.

Although the team at the New York Times was able to make advances when it comes to using a blockchain to fight misinformation, by the end of their first run, the team ended up far from the finish line.

News Provenance Project
In its initial phase, The New York Times blockchain focused on photography. The blockchain was able to track a photo from the time it was captured, to the time it was edited, to the time that it was published. The metadata of the photo was stored on their blockchain and could be shared across the blockchain network's members who they envisioned would be news publications and social media platforms.

After conducting research interviews, the NYT team learned that individuals who were interested in verifying this sort of data were looking to see, who took the photo, where it was taken, how many changes/edits were made to the photo, and where the photo had been published. Although the New York Times R&D team was able to create a blockchain that did that successfully, the NYT team still felt as though they had missed the mark, or were far away from the goal line.

The obstacle
The New York Times research and development team found that there needed to be a better, easier way to check the photos that appear on social media against the photos on the blockchain.
"Bhaskar Ghosh, a student at Columbia University who conducted research for the News Provenance Project, investigated perceptual hashing and computer vision as potential mechanisms for associating photos on social media with photos on the blockchain. However, Ghosh noted that those mechanisms would require further refinement," according to the New York Times blog post. For blockchain to be used across both news publications and social media networks to battle misinformation when it comes to photographs, improvements need to be made that make it easier for all parties involved to use the blockchain to verify the data they are seeing.

For the next phase of the News Provenance Project, the NYT is looking for collaborators to build standards, rating systems, and enable detection of misinformation. If you believe you assist the News Provenance Project in that regard, you should head over newsprovenanceproject.com to learn more.

Korea university to build blockchain and AI campus

A South Korean university has announced that it's building a blockchain and artificial intelligence (AI) campus in the city of Daegu. The campus will take a year to construct, with admission set to begin in 2021.

Suseong University partnered on the initiative with the Korea Artificial Intelligence Association (KORAIA). In an announcement on local outlet Money Today, the university revealed that the campus will also focus on other emerging technologies such as big data and cloud computing.

A number of technology companies based in Daegu have already signed up to be part of the project. They will provide training to the students, as well as practical experience. They include Wooshin Co. Ltd, an AI company based in Daegu.

The COVID-19 crisis has created a need for more robust systems, and combining blockchain with AI is the best way to respond to this need, according to Kim Kun-woo, the university's Planning and Coordination Division director.

Kun-woo further revealed that the university intends on giving students at the campus firsthand experience in the blockchain and AI industries by pairing them up with experts in these fields.

South Korea has been a global hub for blockchain technology, with the government playing a key role in the industry's development. As CoinGeek reported recently, the country launched a fintech sandbox that has promoted the growth of several blockchain startups. In its latest report, the Financial Services Commission revealed that the sandbox has attracted $111 million in the last year and created 380 jobs.

Elsewhere, the country's central bank published a report that touted the use of blockchain-based digital currencies. The Bank of Korea pointed to the decline of cash use and the advancement of digital payment technologies as key reasons why central banks are increasingly developing CBDCs. The report further claimed that several central banks have developed IT systems that rely on DLT to record digital currency transactions.

JPMorgan agrees to settle digital currency fee lawsuit for $2.5M

U.S. banking giant JPMorgan Chase Bank has agreed to a settlement in the amount of $2.5 million to end an ongoing class action lawsuit over digital currency fees.

The case was raised by bank customers after it emerged the bank had decided to charge digital currency transactions as if they were cash advances, attracting higher fees than other types of transactions.

Such transactions were historically charged as purchases until 2018, when the bank unexpectedly switched to treating digital transactions as advances. The case was raised by Brady Tucker, who was joined shortly thereafter by Ryan Hilton, Stanton Smith, and other Chase customers.

While the settlement sees no acknowledgement of wrongdoing, the plaintiffs have welcomed the flexibility of the bank in reaching a conclusion to the matter.

In a statement on behalf of the plaintiffs, Tucker said the settlement was a good outcome to the case.

"This settlement represents an outstanding result for settlement class members. Plaintiffs estimate that the $2.5 million settlement fund constitutes more than 95% of the [damages allegedly sustained by] settlement class members. Such a high-percentage recovery stands far above the typical recovery for class actions such as this one."

The settlement brings the legal action to a close, and brings an end to the matter for the thousands of bank customers previously affected by higher card fees for their digital currency transactions.

In February 2018, JPMorgan Chase was among several major banks to announce it was no longer allowing its credit cards to be used to purchase digital currency. During the case, the bank claimed this was not a breach of consumer protection laws.

More recently, the bank has appeared to soften its stance towards digital currency, with JPMorgan even extending banking services to digital currency firms including Coinbase and Gemini.

Happy Bitcoin Pizza Day! But don’t think about the fees

Happy Pizza Day! And this year, please make mine extra spicy. Yes, it's May 22 again, the day all Bitcoiners celebrate by ordering a pizza. Any pizza is good, but to make it special you'll need to buy it with Bitcoin—don't make the mistake of using BTC these days though, because at the time of writing the average transaction fee on the BTC network is US$6.28.

What is Pizza Day and why is it significant?
Today is actually the 10th anniversary of Bitcoin Pizza Day. It's significant because it marks the first (or at least, the first documented) purchase of real-world goods with Bitcoin. Before then, mining and transacting with Bitcoin was largely a hobbyist pursuit, so the purchase proved that Bitcoin could have a real-world dollar value. This in turn sent a price signal to the nascent "market" for Bitcoin, and became the first benchmark for BTC value. The rest, as they say, is history.

On May 18, 2010, Laszlo Hanyecz of Jacksonville, Florida, posted on the Bitcoin Talk forums:
"I'll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day. I like having left over pizza to nibble on later. You can make the pizza yourself and bring it to my house or order it for me from a delivery place, but what I'm aiming for is getting food delivered in exchange for bitcoins where I don't have to order or prepare it myself, kind of like ordering a 'breakfast platter' at a hotel or something, they just bring you something to eat and you're happy!"

It took a few days to finally get a taker—user "jercos" (Jeremy Sturdivant) ordered two large pizzas from Papa John's for delivery to Hanyecz's home, paid in USD and collected the 10,000 BTC. The pizzas themselves cost US$41.

You can see photos of the now-famous Bitcoin pizzas here.
Technically, Hanyecz didn't buy the pizzas directly for Bitcoin so you could say the price included Sturdivant's service fee. Since the Bitcoin price in May 2010 was officially $0, he did take on a $41 risk.

As we now know, that risk paid off—the current market value of BTC is $9053, meaning either owner of the 10,000 coins would now have US$90,530,000. If BTC's all-time-high price stands at $19,891 then 10,000 coins would've been worth $198,910,000. Had they kept those coins in time for the two forks that shifted Bitcoin protocol development to BCH and finally to Bitcoin SV (BSV), it would be millions more.

Only BSV now is Bitcoin according to the Satoshi Nakamoto whitepaper and the original protocol, and 10,000 BSV is currently US$1,915,900.

Million-dollar pizzas, but value is priceless
Yes, that's an expensive pair of pizzas (for pedantic reasons, remember it was two large pizzas instead of the single "198 million dollar pizza" often mentioned in the media). Naturally, Hanyecz often finds himself in demand for a quote on whether he regrets his purchase. He's on the record as saying he doesn't at all, since his move kickstarted the Bitcoin economy. Had he not sent those 10,000 coins, and had no-one else taken the plunge either, Bitcoin's value could still be $0 today.

It's a sign that, unless people are willing to take risks and do something to give Bitcoin value, it doesn't have any. What if Hanyecz had abided by BTC's "HODL" mentality, or cared about all the people who called him crazy over the years, reminding him of his (theoretically) lost millions?

Most people who've been in the Bitcoin community for many years have "Bitcoin Pizza" stories of their own to tell. This writer likes to show off his "thousand dollar" Bitcoin keychain; everyone hates to be reminded of how much money they'd have now if they'd never spent those coins.

But again, if no one had ever spent Bitcoin then the value of Bitcoin would be $0. Bitcoin only has value if it's used in the real world. And thanks to the people who invested time, effort and money building user-friendly services so more people could use Bitcoin, that value has increased even more over time.

Think about all that next time you hear someone say "HODL" (ie: save your Bitcoins, don't spend them). HODLing creates no value whatsoever. BTC wouldn't even have speculative-gambling value if no-one sold them, and that's about the only utility BTC has nowadays. If you know any committed BTC HODLers, remind them how much that $6.28 transaction fee they just paid could be worth at some random point in the future. That's extra spicy.

BSV, on the other hand, recognizes real-world usage as the main value driver and its people build services that aim to solve real-world problems. The large-volume, low-fee model is creating a global immutable ledger for enterprises, and yet remains cheap enough to send individual transactions for cents, or much less.

But enough of that—Happy Pizza Day once again, and enjoy the food!

Bitcoin mixers see increased usage from darknet entities

A new report by Crystal Blockchain, the cryptocurrency analytic and transaction tracing platform created by Bitfury, reveals a number of statistics regarding darknet transaction flows between BTC mixing services, digital currency exchanges, and other darknet entities.

The Data
Crystal Blockchain's report "reviews the use of BTC by darknet entities; [as well as] analyzes darknet interactions with exchanges and other entities throughout the first quarter of 2020 and compares it to historical darknet activity from the past three years."

Ultimately, Crystal Blockchain found that the total number of BTC being sent and received by these exchanges has decreased, however, the total amount of USD has grown significantly.

Key findings
The report found that the amount of BTC sent to digital currency mixing services—services that mix digital currency funds from different sources together to obscure the trail back to the original source—rose by over 2000%. In Q1 2019, only $3 million (790 BTC) was sent to mixing services by darknet entities, but in Q1 2019, that number rose to $67 million (7,946 BTC).

The research found that the amount of BTC received by darknet entities from mixing services had also increased by about 3x. Darknet entities received roughly $2 million in BTC (288 BTC) from mixers in Q1 2020, compared to the $400,000 (106 BTC) received from mixers in Q1 2019.

BTC sent to exchanges from darknet entities
From Q1 2019 to Q1 2020, the amount of BTC sent to digital currency exchanges from darknet entities decreased from 24% of all BTC to 13%.

"This is likely in response to increased regulation and verification processes for exchanges, leading darknet bitcoin owners toward other services to obfuscate the source of their coins," according to the report.

Darknet entities were using digital currency exchanges to liquidate their dirty money, but as more exchanges required users to verify personal identification information, and as more regulatory agencies kept an eye on digital currency companies that fall under their jurisdiction, exchanges became a less attractive option for darknet entities to convert their digital currencies for fiat.

The report found that the amount of BTC transferred between darknet entities increased by 161% from Q1 2019 to Q1 2020. In Q1 2019, only $21 million was transferred between darknet entities, while in Q1 2020, $55 million was transferred.

In conclusion
Crystal Blockchain's research shows that darknet entities are alive and active and that they are using BTC as a tool to maneuver their illicitly earned money.

"These statistics indicate that BTC continues to be a financial tool for darknet entities," says the report. "While more exchanges implement the FATF requirements, darknet users are trying to avoid the risk of unveiling of their activity by those exchanges. To hide darknet activities, they started to prefer mixing services to exchanges for withdrawal of cryptocurrency."

BTC remains a crucial tool and currency on darknet marketplaces—and government agencies know it. This has prompted authorities to crack down on digital currency exchanges and tracing funds back to their point of origin, which is causing darknet entities to use mixing services to mask their activity. Regardless, more and more money is being sent and received by darknet entities each year.

Embattled ABTCoin ICO can’t pay settlement costs

ABTCoin, a digital currency startup that was found guilty of violating federal securities laws, has just told New York federal judge Vernon S. Broderick that they cannot pay the $250,000 settlement that they agreed to pay plaintiffs.

$20 million ICO but financially struggling
On May 12, ABTCoins lawyers from Reitler Kailas & Rosenblatt LLC wrote a letter to U.S. District Judge Vernon S. Broderick saying the company was not able to pay the settlement cost that they proposed "due to a change in circumstances." The lawyers also added that ABTCoin was not able to cover their legal costs, and therefore, Reitler Kailas & Rosenblatt LLC lawyers were requesting to withdraw from the case.

This news comes as a surprise considering that ABTCoin raised more than $20 million in its 2017 initial coin offering (ICO). Before hosting a token sale, ABTCoin told potential investors that it was going to use the funds that they raise to create "the fastest blockchain in the world." However, upon release, the ABTCoin blockchain was not able to accomplish the technological achievements they had marketed. In addition, the ABT blockchain did not see very much user adoption and decreased in value by 85% by March 2018.

The lawsuit
After experiencing ABTCoin's technological shortcomings, investors in the project took action against the company.

Raymond Balestra, the lead plaintiff in the class-action lawsuit, sued ABTCoin, claiming that they had conducted an unregistered securities sale in 2017. ABTCoin attempted to have the case dismissed, but in March 2019, Judge Broderick rejected ABTCoin's dismissal bid, saying that the plaintiffs had adequately shown that ABTCoin had violated federal securities laws.

ABTCoin may have done this because they are making a legal chess-move, or maybe ABTCoin is out of money. It looks like the ABTCoin case is coming to a close—but backtracking on the settlement that they proposed themselves was unexpected. 

Judge junks $9M digital currency scammer’s COVID-19 defense

The founder of an alleged digital currency Ponzi scheme alleged to have scammed $9 million from unsuspecting investors has been denied a reprieve from custody, after citing health concerns over COVID-19.

Judge John Tuchi rejected an emergency motion for release from prison submitted on behalf of alleged digital currency scammer John Caruso of Zima Digital Assets, as he awaits trial on charges that could result in a five-year prison sentence.

Caruso said that the risks of COVID-19 meant that there was a health risk to his ongoing detention, in a motion considered by the court this week. Judge Tuchi denied the motion on the grounds that Caruso poses a significant flight risk, as well as highlighting the potentially larger risks of contracting COVID-19 in the outside world.

The denial is the second time the argument has been heard by a judge. Previously, Judge Michelle Burns pointed out that 28-year-old Caruso was healthy and unlikely to suffer adverse effects from coronavirus in any event.

The COVID-19 defense has been brought forward by a number of high profile prisoners in recent weeks, with legal representatives arguing over the risks to health for those detained in prisons.

However, in the Caruso case, both judges have independently opted to retain the accused in custody, pointing to his significant criminal history among other factors.

Caruso is accused of establishing the Ponzi scheme with his business partner Zachary Salter, offering investors the chance to secure market-beating returns from investing in digital currency.

While the scheme paid out an initial $1.9 million of the $9 million total taken in, the pair are accused of then using client money for personal gain, including racking up gambling debts $830,000, private jet and vehicle rentals of $540,000 and $670,000 in credit card bills.

Caruso is now awaiting trial, scheduled for July 2020.