Cboe Exchange Withdraws Proposal for VanEck-SolidX Bitcoin ETF

The Cboe BZX Exchange has withdrawn a proposed rule change that, if approved, would clear the way for a bitcoin exchange-traded fund (ETF) …

The Cboe BZX Exchange has withdrawn a proposed rule change that, if approved, would clear the way for a bitcoin exchange-traded fund (ETF) backed by VanEck and SolidX.

In a notice published Wednesday, U.S. Securities and Exchange Commission (SEC) deputy secretary Eduardo Aleman wrote that the Cboe BZX Exchange had pulled its proposed rule change, which would have allowed it to list shares of the VanEck SolidX Bitcoin Trust if approved. The exchange filed its withdrawal on Jan. 22.

The proposal was filed last June, when VanEck, an investment firm, teamed up with financial services provider SolidX to provide a physically-backed bitcoin ETF to the market (other such proposals have relied on bitcoin futures contracts, rather than the cryptocurrency’s price itself).

The SEC delayed any decision on the proposal a number of times, asking for public comment and taking meetings with proponents. The regulator faced a final decision deadline of Feb. 27.

While the notice itself did not provide a reason for the withdrawal, some securities lawyers speculated that the ongoing government shutdown would result in the ETF being denied, as no staffers at the SEC are able to review the proposed rule change.

In an email, VanEck director of digital asset strategy Gabor Gurbacs told CoinDesk that the filing “has been temporarily withdrawn.”

“We are actively working with regulators and major market participants to build appropriate market structure frameworks for a Bitcoin ETF and digital assets in general,” he said.

VanEck CEO Jan van Eck told CNBC earlier Wednesday that the proposal was being withdrawn and would be submitted at a later date following continued discussions with the SEC – yet those talks were essentially put on hold as a result of the ongoing partial government shutdown in the U.S.

“We were engaged in discussions with the SEC about the bitcoin-related issues, custody, market manipulation, prices, and that had to stop. And so, instead of trying to slip through or something, we just had the application pulled and we will re-file when the SEC gets going again,” van Eck told the network.

In a previous interview with CoinDesk, attorney Ethan Silver, chair of the broker-dealer practice at Lowenstein Sandler, explained that “if [the SEC] were forced to deal with [the proposal], they would sooner deny it than be put in a position [where it is approved on a technicality].”

SEC image via Shutterstock

This story is developing and will be updated as new information comes in.

The full filing can be found below:

Cboe Notice of Withdrawal by CoinDesk on Scribd

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Gold Price May Offer Clues About Next Big Bitcoin Move

Bitcoin (BTC) traders could get cues from an apparent negative correlation that has developed between bitcoin and gold prices. Gold picked up a …

Bitcoin (BTC) traders could get cues from an apparent negative correlation that has developed between bitcoin and gold prices.

Gold picked up a strong bid at $1,196 on Nov. 13 and jumped to $1,300 on Jan. 4, possibly due to a sell-off in the weakening U.S. dollar. The greenback was down against most currencies in last two months of 2018 on growing speculation that the Federal Reserve (Fed) could decrease or pause interest rate hikes in 2019.

Bitcoin, however, did not benefit from that broad-based sell-off in the dollar. The cryptocurrency instead saw a revived bear market with a convincing move below $6,000 on Nov. 14 – a day after gold found takers around $1,200 per ounce.

That price action indicates that the two assets are inversely correlated. Validating that argument is the 90-day correlation coefficient of -0.593. The statistical measure ranges from -1 to 1, with a negative number representing the inverse relationship between the two variables, while a positive number implies direct correlation.

As a result, the leading cryptocurrency by market value could be influenced by the next move in gold prices. Currently, the safe haven metal is trading at $1,285, having hit a three-week low of $1,276 earlier this week.

Meanwhile, BTC is trading in a narrow range above $3,500 for the 13th straight day. The prolonged period of consolidation could end with a strong bullish move if the corrective pullback in gold worsens.

It is worth noting that correlation is not causation and only describes the relative change in one variable when there is a change in another.

Bitcoin and gold chart

As seen above, bitcoin and gold have moved in opposite directions since late November.

Gold rallied 8.33 percent in seven weeks leading up to Jan. 4. During the same time, BTC depreciated by 50 percent.

Further, gold’s repeated failure at $1,300 has established that psychological level as a stiff near-term resistance. Meanwhile, BTC has defended $3,500 since Jan. 11.

The cryptocurrency could see a strong bullish move if the pullback in the yellow metal gathers steam.

Bitcoin daily chart

On the daily chart, BTC created a “long-tailed” candle at the crucial support of $3,500, signaling bearish exhaustion. A positive follow-through – that is, a convincing move above $3,615 (Tuesday’s low) – would confirm bullish bias.

View

  • Bitcoin and gold look to be inversely correlated and sustained weakness in gold could bode well for BTC going forward.
  • As far as technicals are concerned, the immediate bias remains bearish, as indicated by the downward sloping 10-week MA. The prospects of a break higher toward $4,000 would improve if prices close today (as per UTC) above $3,615.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via CoinDesk archives; charts by Trading View

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Coinnest Loses $5 Million in Accidental Bitcoin Airdrop

Coinnest said it accidentally sent 6 billion (about $5.3 million) worth of Bitcoin (BTC) to the account of some of its traders. As it turns out, the exchange …

According to a report made by CoinDesk Korea, an internal server error that occurred on January 18 caused Coinnest, a crypto exchange platform based in South Korea, to lose millions of dollars in cryptocurrencies. Coinnest said it accidentally sent 6 billion (about $5.3 million) worth of Bitcoin (BTC) to the account of some of its traders.

As it turns out, the exchange was looking to airdrop We Game Tokens (WGT), but a mix-up occurred on their servers and wiring, and in a catastrophic blunder, the company ended up airdropping Bitcoin instead.

Coinnest Airdrop

Remedy Efforts and an Appeal from Coinnest

In the midst of it all, Coinnest stated that it also sent some Korean won to some of its clients. However, it has been working on ways to remedy the situation and recover the lost funds by rolling back its servers. Some account holders decide to cash in, the moment they saw the free Bitcoin tokens that miraculously appeared in their accounts.

This overhaul resulted in a flash crash, with the exchange’s taking price for Bitcoin going as low as $50. In a bid to recover its funds, the exchange is now sending a plea to its customers—especially those who haven’t touched the funds they received—to return the funds.

The server issues were eventually fixed a day later, with about half the tokens returned.

Innocent Traders Aren’t Spared as Well

The server error that caused this unforced transfer affected some Coinnest traders as well. This, in addition to the overloading of the server with withdrawal requests from traders who had “miraculously” received Bitcoin tokens, shut the company’s servers down for hours.

This downtime caused clients to incur trading losses, but the exchange says it doesn’t have any plan to reimburse affected traders for their losses, but this issue might be far from over.

“There are currently no plans to compensate members for transactions caused by computer errors. There are members claiming to have lost opportunity costs due to a 9-hour server check. It is difficult to compensate the damage as realistic as it seems,”



Coinnest explained in a statement to CoinDesk Korea.

Kim Ik-hwan’s Crypto Scandal

This isn’t the first time that the South Korea-based crypto exchange is embroiled in blunder-related scandal. Back in 2018, the exchange was caught in a scandal involving Kim Ik-hwan, its former Chief Executive Officer.The scandal at the time was a first for the cryptocurrency sector in South Korea for a local crypto business to have its employee detained by authorities.

Kim, along with three other Korean cryptocurrency executives who weren’t named, reportedly embezzled billions of Korean wons from the exchange’s clients’ accounts and transferred them into his.

As a result of his actions, he was promptly removed by the Coinnest Board of Directors, while the exchange made a public apology to its customers or any consequences that they might have suffered from the issue.

Local authorities subsequently arrested Kim but the case has remained pretty silent since then.

The financial regulator also filed fraud charges against the executives of Seoul based cryptocurrency exchange Upbit. According to the Financial Services Commission of South Korea, the executives had manipulated the trading volume figures by using falsified orders in a bid to attract investors to the exchange.

The Commission had also claimed that underperforming digital assets listed on the platform were also targeted to create an impression that they were popular with traders, where in actual fact, they were not.

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50 Cut as $60 Million Blockchain Project Nebulas Lays Off 60% of Staff

The company behind the Nebulas blockchain project has gone from a team of 80 people to just 30, CoinDesk has learned. After gaining attention in …

The company behind the Nebulas blockchain project has gone from a team of 80 people to just 30, CoinDesk has learned.

After gaining attention in August for its decision to delay its token distribution, including holding onto founder tokens for a period of 10 years, the company has undergone a series of layoffs that have seen peripheral elements of its roadmap shelved, at least pending a recovery in the market for Nebulas’ NAS token.

“One of the reasons was the market price kept going down,” Becky Lu, a spokesperson for the company, told CoinDesk.

NAS, meant to power a protocol that is itself seeking to measure and score other blockchains, debuted at $2, but is currently selling for a little more than a quarter of that price now, according to CoinMarketCap. Once a top-100 cryptocurrency, the market cap of the NAS token is currently $25.7 million.

Lu said the layoffs at the company began last summer, impacting its largely Beijing-based team.

The company, she said, also wanted to tighten its strategic focus:

“Another reason we decided to cut off the unimportant projects like third-party wallets [was that they are] not core to the main tech visions mentioned in the [Nebulas] white paper. So the dev team of that project was first impacted.”

The news is the latest that hints at the extent to which a downturn in the broader cryptocurrency market is hurting companies in the blockchain industry – following layoffs at ConsenSys, Bitmain, ShapeShift and BlockEx. That said, the cutbacks at Nebulas, with more than 60 percent of staff being shown the door, have been some of the most dramatic reported yet.

Two years’ runway

Lu would not say whether treasury management had been an issue, though it’s notable the cuts came just seven months after the team raised $60 million in its token sale.

Nebulas has continued to make progress despite setbacks, issuing various incentive programs for community members and developers.

At the end of 2018, the company launched its NOVA testnet, which measures the quality of data on blockchains. More detail can be seen in CEO Hitters Xu’s 2018 year in review post on Medium.

Lu now estimates the team to have enough runaway for two years, suggesting the project will have time to make additional progress on its roadmap. She concluded:

“Now that the team has accomplished most of the tech development, the main job for this year is to build up the community government and consensus to achieve full decentralization.”

Public-domain Cat’s Eye Nebula image via NASA

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Bakkt Makes Initial Hiring Push for Bitcoin Futures Exchange

Ahead of its hotly anticipated launch, bitcoin futures exchange Bakkt has launched a hiring campaign. Eight new job posting were published Tuesday …

Ahead of its hotly anticipated launch, bitcoin futures exchange Bakkt has launched a hiring campaign. Eight new job posting were published Tuesday on the company’s website.

Bakkt is looking for several experienced software developers, including mobile and blockchain developers; an institutional sales manager with experience in North America or Asia; and three higher-level positions including a director of finance, director of security engineering and director for blockchain engineering.

An institutional-grade regulated exchange for crypto derivatives founded by the Intercontinental Exchange (the New York Stock Exchange’s parent company), Bakkt was expected to go live on December 12 last year, but the launch was postponed twice.

It was initially delayed to until January 24, with the company citing a need for “additional time for customer and clearing member onboarding.” It is now delayed indefinitely while the exchange waits for the Commodity Futures Trading Commission (CFTC) to grant an exemption for Bakkt’s plan to custody bitcoin on behalf of its clients.

The ongoing government shutdown has contributed to the delay. The CFTC needs at least 30 days for a public comment period, plus however much time may be needed to review the comments and make a decision once this period concludes. It is unclear when this comment period may begin.

However, Bakkt’s team hasn’t been sitting idly by waiting for the green light: it closed a $182.5-million funding round and acquired “certain assets” belonging to Rosenthal Collins Group (RCG), an independent futures commission merchant, earlier this month.

The deal, involving RCG’s staff and technology, was supposed to help Bakkt improve its risk management, anti-money-laundering (AML), know-your-customer (KYC) and treasury operations, Bakkt CEO Kelly Loeffler said in announcing the acquisition.

Her most prominent hire to date has been Adam White, one of the longest-serving employees at industry unicorn Coinbase, who joined Bakkt as chief operating officer last year.

From left: CoinDesk advisory board chairman Michael Casey, Bakkt CEO Kelly Loeffler and Intercontinental Exchange CEO Jeff Sprecher at Consensus: Invest 2018. Image via CoinDesk archives

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