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Crypto market analysis: Regulation of crypto, Cryptopia news
February 04  |  8 min read

Crypto Week #5 Overview

COIN360 Editorial Team

This week the cryptocurrency market surpassed the record for the longest bear market ever.. Ethereum is in the process of releasing phase 0 for Serenity, and Kik’s CEO may have inadvertently handed the SEC the evidence they needed to declare Kin a security.

Here’s what you need to know about the last 7 days:

1. Cryptocurrency market analysis

If you recall our last review, the market was set this week to breaking the record for the longest bear market in the decade long history of cryptocurrencies – and Bitcoin has hit its lowest point of the year this week. Monday 28th witnessed a 4% drop from Sunday’s peak. That day Bitcoin remained within a $3,460-$3,490 corridor. Bitcoin’s price then dropped to the week’s lowest, at $3,400, on Tuesday 29th, before recuperating and rising to a $3,471 peak within 24 hours. Continuing the climb, by Wednesday 30th a new peak reached $3,503. In a roller-coaster-like curve, Thursday settled back down at $3,434 (nearly a 2% drop from the week’s high) and maintained this until today, Friday 1st. At press time the price of Bitcoin is on the rise again, trading at $3,471 for a 0.5% gain on the day and a 2.6% loss on the week.

Ripple (XRP) maintains second place, and had an impressive 15% surge this week unseen in any other top 10 coin. Between the 28th and 29th, the price of Ripple (XRP) remained relatively stable, hovering between $0.287 and $0.299. The 15% climb came on the 30th: at $0.333 Ripple (XRP) peaked in its weekly high point. This was followed by a 10% correction down to $0.299 on Thursday 31st. Today, February 1st, the price of Ripple (XRP) has recuperated slightly to $0.308 at press time, for a 0.7% loss on the day and a 2.4% loss on the week.

Ethereum (ETH) is not having its best week. A 12% slump (from $117 to $103) was registered between the 27th and 28th. It recovered to peak twice consecutively at $107, once on the 28th and once on the 29th. By Wednesday 30th, the price of Ether made a comeback to peak at $110; still at a 6% loss compared to the $117 measured on the 27th, and at a total 31% compared to this year’s high ($160 on January 4th). Thursday 31st bottomed at $105 and today Friday 1st of February the price of Ethereum (ETH) stands at $107 at press time, for a 0.2% gain on the day and a 7.4% loss on the week.

EOS’s Sunday to Monday drop represented a 9% loss. After hitting $2.2 on Monday 28th, the price of EOS saw an upward slope: by Tuesday 29th the altcoin was valued at $2.32 at it’s peak, and Wednesday 30th peaked at $2.36. Thursday saw a minor correction, hovering at around $2.33. Finally, today February 1st, the price of EOS has recovered, and stands at $2.39 for a 2.6% gain on the day and a 4.2% loss on the week.

TRON (TRX) has managed to climb to 8th place in market cap (with $1,749,705,299). Despite these news, we cannot report that its market value was as successful this week. The price of TRON (TRX) dropped 16.6% from its Sunday high of $0.030 to $0.025 on Monday 28th. Sun’s altcoin peaked at $0.0278 on Tuesday 29th and at $0.0279 on Wednesday 30th, only to shed nearly 13% and bottom at $0.0243 on the 31st. Today February 1st, the price of TRON (TRX) has peaked at $0.0266 and remains such at press time, for a 6% gain on the day and a 1.3% loss on the week.

2. Görli testnet to kick off deployment of Ethereum 2.0

The open-source Görli blockchain, which has been under construction since September 2018, has finally launched on January 31st 2019. This testnet will be a trial for Prysm software, a key sharding client for Serenity, a.k.a Ethereum 2.0. Görli is a “community-built proof-of-authority cross-client testnet” which will synch Parity, Geth, Nethermind, Pantheon, and EthereumJS nodes. Its Berlin-based developers wish for Görli to aleviate current testnets and give ETH and ETC dapp developers a more robust testnet.

This is the first pre-release in phase zero of the transition into Serenity. It will be the first in a series of weekly releases throughout February 2019. Serenity is Ethereum’s fourth and last upgrade, and will see the network replace PoW with PoS in its quest for scalability. The Constantinople hard fork, which was put off this month because of a security issue, was meant to prepare the network for Serenity.

3. Analyst questions validity of EOS’s user metrics

Louis Aboud Hogben, head of research at Wyre Capital Management, took to Twitter this week to question the reliability of EOS’s user metrics (active addresses, dapp DAUs, etc) as a measure of the network’s adoption. In an analysis of the mechanism and costs underlying account creation, he brings attention to his calculation that the assumed cost for creating EOS accounts (staking tokens in order to receive CPU and NET) could be voided by big EOS holders who could, in a cyclical manner, delegate resources through inactive new accounts to make them appear active, incurring only in a marginal, sunken RAM cost. According to the analysis, it would cost approximately $450,000 to create 1M fake active EOS users (or accounts or addresses).

This reflection was prompted in part by a report by which claims that, since the beginning of the year, EOS dapps have come to account for 55% of the total on-chain USD volume transacted across EOS dapps, TRON dapps and Ethereum dapps, while Ethereum dapps would only make up for a 6%. Regarding the relation between this report and Hogben’s tweet, user Marcos del Río responded “if you look at the numbers on DappRadar and the numbers of report you will see the biggest mismatch there: the DAU are being summed. The real number should be an average of the DAUs or, even better, move them to MAUs.”

4. US Government reopens with new regulations

Although last week Pennsylvania’s Department of Banking & Securities ruled that crypto exchanges are not subject to the Monetary Transmitter Act, the Florida appellate courts seemed to disagree with similar rulings made by the Miami-Dade circuit court after a website designer by the name of Espinoza was charged for selling BTC to an undercover cop. The first judge ruled that money laundering and transmitting never occurred, since the $1.5K worth of BTC is not actual money. The appellate courts disagreed arguing that “Espinoza’s bitcoins-for-cash business requires him to register as a payment instrument seller and money transmitter.” Charges for Espinoza have been reinstated.

In contrast with Florida’s ruling, Wyoming instead passed a bill requiring cryptocurrencies to be treated as fiat money beginning the 1st of March. New York appears to be as progressive after the Department of Financial Services granted a BitLicense to Cottonwood Lending LLC allowing cryptocurrency ATMS to operate throughout the state alongside BTM operator, Coinsource.

5. Cryptopia continues, Singapore is scammed, $1.7B hacked in 2018

Ciphertrace published data illustrating at least $720M were lost to ponzi schemes, fraudulent ICOs, and exit schemes, while about $950M were stolen from crypto exchanges, all within 2018. One of the top threats last year was SIM swapping. 20-year-old Joel Ortiz pleaded guilty this week after stealing $5M through this technique. Meanwhile, New Zealand’s Cryptopia hack carries on into its second week as the hackers maintain control of Ethereum wallets. On the 29th, another 17K wallets were drained of 1,675 ETH (around $180k) according to a report by Elementust.

Finally, The Monetary Authority of Singapore (MAS) was the victim of a different crypto scam this week. A fraudulent group going by the name of May Code Trader was claiming to be selling Singapore’s new national (crypto)currency. This was, of course, a coin that was never approved by MAS. Multiple websites have claimed that different coins have been named the official digital currency of the country, leading to a warning published by MAS on January 29th.

6. KIK video condemns company in fight with the SEC

On the 27th, Kik Interactive Inc., the Canadian messaging app, published a Medium post explaining that they would take the SEC to court over a potential enforcement action against Kik’s 2017 ICO for its cryptocurrency Kin. The post refers back to Kik’s official Wells Response, published back in December, which expresses that Kik never promoted Kin as a passive investment opportunity, but rather designed and offered it as a currency to be used as a medium of exchange. The document adds examples of cases that satisfy the Howey Test and explains why Kin does not. It adds confidently, “The Staff’s proposed enforcement action against Kik and the Kin Foundation will likewise fail any rigorous analysis of whether offers and sales of Kin amounted to offers or sales of a “security”.

But by the 31st, media outlets were revealing that Kik’s CEO, Ted Livingstone, may have already doomed his company to lose this fight, after a 2017 video surfaced in which he claims “We are using Kik to boost the value of Kin.” These and other statements might be incriminating in light of the Howey test, which states a security is an “investment of money in a common enterprise with an expectation of profits solely from the efforts of the promoter or a third party,” meaning that the token’s utility is not the only relevant fact in the equation.

7. Iran attempts to circumvent sanctions through cryptocurrency

Head of Iran’s Trade Promotion Organization, Mohammad-Reza Modoudi, has entered talks with Austria, Bosnia, England, France, Germany, Russia, South Africa, and Switzerland in efforts to bring foreign investment toward Iran’s fiat-pegged digital currency. While there is speculation as to when the coin will launch, the strategy is a sure way to defy Trump’s reinstatement of sanctions from November 2018.

Just west of Iran, terrorist organization Hamas has turned to Bitcoin in response to Israel’s Prime Minister Benjamin Netanyahu’s freezing of over $15 million in aid to Gaza civil servants due to border tensions. The terrorist organization is barred from many global banks due to anti-money-laundering and terror financing prevention.

8. Mac malware yields access to wallet and exchange accounts

Unit 42 of the cybersecurity firm Palo Alto Networks reports they have discovered a malware on Mac that allows hackers to save web cookies (specifically those associated to online cryptocurrency exchanges), steal Chrome passwords, and recover sms text messages, and use this data to circumvent authentication systems and gain access to users’ cryptocurrency exchange accounts and wallets.

Unit 42 believes the malware was developed from OSX.DarthMiner, a malware known to target the Mac platform. The malware, nicknamed “CookieMiner”, also configures the system to load cryptocurreny mining software resembling an XMRig-type coinminer (used to mine Monero). This software actually does not mine Monero, but Koto. The researchers noted that the application firewall program Little Snitch is capable of stopping this malware.

9. Layoffs at ConsenSys followed by layoffs at Coinsquare

Last weeks’ continued layoffs at ConsenSys were mimicked by Coinsquare this week: 30% of their employees were fired. The layoffs seem to be a reaction to the bear market, which has humbled the growth capabilities of numerous companies. Martin Huack, head of talent at Coinsquare, took to LinkedIn to say, “the ever-evolving digital currency/cryptocurrency space has been volatile and unpredictable. Many similar companies in our industry have had to make some tough choices in recent months and Coinsquare has had to as well”.

The cutbacks are made in efforts to ensure continued growth after the launch of two Exchange-Traded-Funds on the Toronto Stock Exchange (TSX). The $120 billion IPO on TSX has yet to occur.

10. UK’s Financial Conduct Authority grants licensing for crypto CFDs.

B2C2’s UK subsidiary, B2C2 OTC Ltd. is now approved by the Financial Conduct Authority (FCA) to introduce crypto contracts for difference (CFD). By allowing eligible counterparties and professional clients to hold CFDs, Max Booner, Founder and CEO of B2C2, hopes to expose investors to cryptocurrency markets while maintaining the high liquidity and competitive pricing investors are accustomed to.

The licensing is a major step forward since the FCA had warned investors of crypto CFDs back in November of 2017 claiming “they are an extremely high-risk, speculative investment,” (FCA).

11. Binance introduces crypto purchases with credit and debit cards

Cryptocurrency exchange Binance has partnered with payment processor Simplex in order to accept payments with debit or credit cards. Binance’s latest press release details, “Binancians are now able to use Visa and MasterCard to buy BTC, ETH, LTC and XRP, and start trading on within minutes.”

This move came as a surprise, considering that Binance and always been a crypto to crypto exchange. CEO Changpeng Zhao was quoted saying “With most of the world’s money still resting in fiat, building fiat gateways is what we need now to grow the ecosystem and create more long-term opportunities for crypto.” The choice could allow Binance to compete with Coinbase in the US market. Sources are wondering whether this system will last, since in the past, credit card issuers have banned their customers from purchasing cryptocurrencies with credit (think Lloyds Bank, JP Morgan, Citi Group and The Commonwealth). Simplex, however, seems onboard with crypto: “We’re thrilled to partner up with Binance and together enable a much better, faster and easier experience,” said CEO said Nimrod Lehavi.

Although breaking the bear market record did not bring complete disaster to the crypto markets, it did not pass unnoticed either, as most top coins are trading in the red. As the week draws to a close, Kik’s open case stands as the most eventful news to look forward to next week.

We wish you a great week,

Coin360 Editorial Team