Author: Mark Hartley

In a move that will likely turn back the clock on blockchain development within the country, the South African Reserve Bank (SARB) has quietly excluded cryptocurrency developers from a tax incentive aimed a technological innovation.

By recategorizing digital currencies as “financial instruments” in the Taxation Laws Amendment Bill, the SARB has removed the ability for cryptocurrency development businesses from claiming a significant tax deduction. South Africa has long been one of the leading blockchain and cryptocurrency positive countries in Africa, with many crypto-personalities hailing from its shores – including Monero-founder Riccardo “Fluffy Pony” Spagni.

But the long-drawn-out bear market of 2018 has damped enthusiasm for digital currencies amongst the nations financial institutions, with authorities making it clear that they are wary of the numerous scams the industry has suffered of late.

A step in the wrong direction

Local publication BussinessLive spoke to Rob Hare, a senior associate at law firm Bowmans, who sees the move as nonsensical – especially considering that South Africa was recently on track to becoming a leading fintech hub for Africa.

“The supposedly small change of categorizing cryptocurrency as a financial instrument is an unnecessary step in the wrong direction,” he told the publisher.

However, Consensys ambassador and former Strate CEO Monica Singer, argues that the regulators are simply being prudent and avoiding a situation where SA becomes a tax haven for developers. The change in law also means any losses made while trading cryptocurrencies are now “ring-fenced” and will be treated in the same way as commodities-based derivatives, promissory notes and futures contracts.

“Collectible Items”

A further update compares the trading of cryptocurrencies as similar to that of dealing in ‘collectible items’ or ‘sports betting’ – high-value economic activities that cannot be conducted on an actual business basis. Jessica Carr, an associate at Cliffe Dekker Hofmyer, told BusinessInsider the change means traders can no longer treat their cryptocurrency losses in the same way stock market traders do.

“Cryptocurrency trade will now be posed with a differentiation between losses resulting from the actual trading activities of a taxpayer, and the losses resulting from what could be perceived as the taxpayer’s hobbies or lifestyle activities,” she said.

The change will no doubt drive cryptocurrency traders to investigate avenues for offshore trading, drawing money out of the country and greatly reducing the much-needed development of financial technology in Africa.

Today saw host to the second day of the World Economic Forum in Davos, Switzerland, where several panelists discussed the future of cryptocurrencies and blockchain technology.

One of the most anticipated reports released at the forum was that of the quarterly top 50 blockchain companies in Switzerland and Liechtenstein’s Crypto Valley. The report, put together by investment company CV VC in collaboration with PwC Strategy and inacta, details the most promising companies in the crypto valley area for Q1 of 2019.

One of the more impressive pieces of information the report reveals is a 20 percent growth in the blockchain sector in the last quarter of 2018. The statistic is very promising considering the extended cryptocurrency bear market that was at its worst during this period. Daniel Diemers is the Blockchain Leader for the Europe and Middle East Asia area at PwC Strategy. He spoke of the benefits of collaborating with CV VC and the growth of the blockchain industry in the country.

“Crypto Valley has grown enormously in just three short years. Even two or three years ago, there were just 10 to 15 companies in the blockchain industry.”

Highlights from the Q1 Report:

New Entries

There were 15 new companies to enter the list since the previous quarter, most notably the payments platform TokenPay and the data analytics company Santiment. Other important additions include: 4ARTechnologies, Boscoin, HDAC, ICON, Mt Pelerin, Nexo, ODEM, Quant Network, Saga, Sygnum, Swiss, Utopiamusic, WPP Energy and Zulu.

Four Unicorns

There were four startups included in this quarter that are considered unicorns – that is, companies worth more than $1 billion.

These are: Ethereum, Bitmain, Dfinity and Cardano.

Challenger List

The report also included a list of promising companies that have a good chance of being included in the next quarterly top 50 report.

These are: ambrpay, Arca Trust, Blockimmo, Cosmos Network, Datum, Friendz, Grain, Metaco, Orion Vault, Pigzbe, PikcioChain, Qiibee, Request Network, Taurus Group and UTRUST.

Japanese cryptocurrency exchange Huobi has been struggling through the year-long bear market that has now extended into 2019. The operator recently shut down a subsidiary in Shenzhen, China, and has had to lay off approximately 100 staff so far this year.

However, the company still maintains a workforce of well over 1,000 employees and manages to continue turning profit. Since it’s launch in November last year, Huobi Derivatives Market (DM) has seen its trading volume soar, breaking the $20 billion milestone just two weeks after surpassing $10 billion.

Livio Weng, CEO of Huobi Global, said the achievement reinforces the companies believe that it truly caters to its user’s needs.

“I believe this explains our platform’s explosive growth, even in the midst of the ongoing bear market,” he said.

FSA Licence

Having been recently awarded its Japanese Financial Services Authority (FSA) licence in a merger with fellow trading platform BitTrade, the exchange may start seeing an even brighter future.

In July last year, Huobi announced it would be ceasing all operations in Japan after the FSA began cracking down on unregulated exchanges. Several hacks and exchange thefts in the country forced the FSA to issue improvement orders, prompting the formation of the Japan Virtual Currency Exchange Association (JVCEA), a self-governing regulatory body. At the time, however, Huobi did not join the JVCEA or apply for an FSA licence.

Now it appears that the successful merger with the FSA-licenced exchange BitTrade has put Huobi back on the map in Japan. Speaking of the developments, Huobi CEO Haiteng Chen said: “We are extremely pleased to once again be offering our services to the Japanese trading public.“

Huobi founder Leon Li also reiterated the companies loyalty to the Japanese market and its priority to work and comply with regulatory bodies.

It looks like Haven Protocol might have pulled one of the first exit scams of 2019, with both anonymous developers missing in action and a team member announcing the project ‘dead’ on its Discord channel.

Haven Protocol is a hard fork of popular privacy coin Monero that marketed itself as an “offshore bank in your pocket”. It claims to be an untraceable cryptocurrency and uses smart contracts to facilitate the storage of large amounts of easily accessible fiat currency offshore. Its intention is to provide a way by which users can keep money ‘hidden’ while also having instant access to markets and the ability to avoid volatile fluctuations.

After it’s launch early last year the coin proved popular, gaining a token price of over $6 and a market cap of $11 million. But as the prolonged bear market decimated the crypto industry, the projects value slowly decreased, only to shoot up again in late November to an almost $20 million. However, after a Twitter storm yesterday revealing problems with management and the alleged disappearance of the core devs, the price has now plummeted to $0.32 and a $2 million valuation.

Twitter user @crypto_blkbeard posted a screenshot that Haven team member news.cutter wrote on the official Discord channel:

“I’ll be honest here. Consider this project dead unless some devs take it over.”

He continued by explaining that the lead developer @Havendev, who is the only person with access to the Github code repository, has been uncontactable for weeks. For what has been touted as a ‘community-based project’ with no ICO or corporate leadership, it seems odd that only one person would have access to the repository.

Yesterday, the cryptocurrency exchange Bittrex announced it will be delisting the XHV token from its platform within 48 hours, citing regular complaints about the coin being a scam. With the price in freefall and all team members seemingly have jumped ship, it would certainly seem like a possible contender for one of the earliest and biggest exit scams of 2019.

The world of cryptocurrency is about to get a massive boost for adoption and recognition via a rather surprising avenue: television.

Kevin Connolly of “Entourage” fame is currently working on a new project called Cryptos, a TV show about a group of friends who utilize cryptocurrency in order to try to make it in Hollywood. After struggling to find financers for their new movie they decided to launch a digital token and fund their own project via the creation of a decentralized film studio.

Connolly, who played the character of Eric ‘E’ Murphy in the hit 2000’s show Entourage, announced the upcoming show at the recent North American Bitcoin Conference in Miami. He believes the show will help introduce cryptocurrency to the world and dispell some of the rumors and confusion surrounding the subject.

“The thing that scares people about crypto is a lack of understanding,” he explained in an interview with Breaker Mag.

Connolly, who will not only star in the new show but also take on director duties, is new to cryptocurrency himself. The conference was his first ever foray into the industry and he admits it’s still a big learning curve for him.

The show is being produced by two long-time blockchain enthusiasts, Erik Sords and Jason King. Both have previously been involved in blockchain startups, including The Academy School of Blockchain and Dionysia, a decentralized global studio. They hope to see the show get featured on Netflix or Amazon Prime and believe Connolly’s inclusion will help in this regard.

This is not the first time cryptocurrency and television have joined forces. Last year saw the release of the first crypto-funded feature-length movie, KevCoin, in the UK. The movie follows the adventures of Kevin Powder, played by comedian Jason Attar, as he attempts to launch his own digital asset. It won Best Comedy and Best Micro-Budget Feature at the London Independent Film Festival.

Arguably the worlds most popular cryptocurrency wallet and exchange platform, Coinbase, has bought out a data collection startup in San Francisco called Blockspring.

Blockspring is a company that collects data and then creates methods by which its customers can use that data in the development of application programme interfaces (API’s). It helps companies build lead lists, automate marketing reports and integrate live data into their websites. It features a varied pricing structure to accommodate any size business and reportedly already serves thousands of clients.

Coinbase didn’t disclose how much was spent on the acquisition but it’s unlikely to have made much of a dent in the company, which was recently valued at $8-billion. The new purchase is believed to be a talent-related acquisition, with Blocksprings staff now joining the Coinbase team. However, current and new customers will still benefit from Blockspring services for the immediate future.

Coinbase has made several other acquisitions over the past few years, including most notably that of Keystone Capital, the securities dealer that provided Coinbase with the licenses necessary to begin dealing in security tokens. The company completed a successful funding round of $300 million in October last year and continues to make investments via its Coinbase Ventures subsidiary.

In addition to the expansion of its business operations, Coinbase has also begun to expand its reach into the charitable sector with the launch of GiveCrypto.org – a website that helps donate cryptocurrency to poverty-stricken nations. Part of the drive included the donation of $10,000 in Bitcoin to Syrian refugees living in Greece last December.

Over the past few days, a new Bitcoin scam has been doing the rounds. It appears to be delivered mostly via email by exploiting weaknesses in Hotmail or Live mail accounts.

Victims receive a legitimate-looking email that will usually mimic an email they are expecting to receive, making the scam seem even more real. A link in the email redirects the victim either to an extremely genuine looking BBC news webpage or simply to a page asking for a password.

It’s unclear as to why the password page comes up but the BBC News website features an article entitled “Panorama: Who Wants to Be a Bitcoin Millionaire.” At this point, the majority of seasoned web users will realise something suspicious is happening and likely close the page. However, those who don’t may be drawn in by the BBC news story and click a further link which redirects to a ‘Bitcoin Trader’ site at the URL https://thesecureoffer.com.

This website very closely resembles the format used by the prominent Bitcoin Revolution scam that has been doing the rounds for almost a year now and is most likely created by the same dodgy scammers. As with previous scams, the site attempts to draw in victims with promises of unrealistic returns and try to get them to deposit money into some or other investment scheme. It utilizes the same chronically overused rhetoric that other scams do, such as “Bitcoin is Making People Rich” and “You can be the Next Millionaire”.

By now anybody even remotely involved in the cryptocurrency industry will instantly see through these thinly veiled attempts at fraud, but yet somehow many people continue to get drawn in by these ridiculous tricks.

Be sure to warn any unsuspecting family and friends that any Bitcoin website that promises to make you ‘the next millionaire’ is almost guaranteed to do the exact opposite.

Following yesterdays $14 million hack at the New Zealand-based digital asset exchange Cryptopia, Changpeng Zhao of cryptocurrency exchange giant Binance has pledged to block any funds linked to the theft.

In a post on Twitter, the Binance founder who is affectionately known as CZ in cryptocurrency circles, announced:

“Just checked, we were able to freeze some of the funds. I don’t understand why the hackers keep sending to Binance. Social media will be pretty fast to report it, and we will freeze it. It’s a high-risk maneuver for them.”

Due it to being one of the largest and most liquid cryptocurrency exchanges in existence, Binance is often used by hackers to launder stolen digital assets. However, as noted by CZ, the exchange is always quick to trace and lock down any stolen funds flowing through its exchange.

Tracking Blockchain Thefts

Blockchain investigators who have been tracking the stolen funds across various exchanges have found evidence that may even suggest the theft was an inside job or exit scam. Exit scams, where a company sells off assets before suddenly closing its operations, have become an increasing threat during the recent year-long bear market that has seen many blockchain businesses struggle to make ends meet.

One such Reddit investigator alleges that transactions on Ethereum blockchain tracker Etherscan reveal suspiciously large amounts of assets being moved from known Cryptopia wallets just before the exchange announced ‘Unscheduled Maintenance’.

The Twitter account WhaleAlert picked up on one particularly large movement of 19391 ether tokens (approximately $2,5 million) moved to a wallet that has since been identified as potentially belonging to Cryptopia. Another user highlighted an address that contained $11 million worth of Ethereum ERC-20 tokens that were transferred directly from Cryptopia.

While Cryptopia has notified the local New Zealand authorities, the exchange is yet to publically comment on the developments.