US Agency Recruits Whistleblowers To Catch Virtual Currency Fraudsters

WASHINGTON (UrduPoint News / Sputnik – 09th May, 2019) Whistleblowers who report cases of fraud using virtual currencies such as Bitcoin are …

WASHINGTON (UrduPoint News / Sputnik – 09th May, 2019) Whistleblowers who report cases of fraud using virtual currencies such as Bitcoin are being solicited with the prospect of earning big cash rewards and steps to protect their identities, according to Commodity Futures Trading Commission (CFTC) advertisement posted online on Thursday.

“CFTC Whistleblower Alert: Be on the Lookout for Virtual Currency Fraud,” the advertisement reads. “We will pay monetary awards to persons who voluntarily provide us with original information… if that information leads to a successful CFTC enforcement action resulting in more than $1 million in monetary sanctions.

The advertisement also promises confidentiality and protection against retaliation.

The notice includes instructions on how to report suspected malfeasance, along with a list of techniques used by virtual currency fraudsters.

One such technique called “bump and dump,” is a scheme in which fraudsters buy huge amounts of a currency to drive up the price and then quickly sell everything, according to the CFTC.

The Securities and Exchange Commission, which operates a similar program, frequently pays whistleblower rewards in excess of $1 million.

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‘One-Stop Shop’ for Crypto Mining and Trading to Launch Spot Market May 23

The Chicago-based company has tentatively set May 23 as the go-live date for bitcoin, bitcoin cash, ether, and litecoin, co-founder and chief marketing …

UPDATE (May 7, 2019, 14:00 UTC): This article was updated to note that Bcause is operating under bankruptcy protection.

———

Cryptocurrency exchange and mining startup Bcause LLC says it’s a few weeks away from launching its spot market, despite operating under bankruptcy protection.

The Chicago-based company has tentatively set May 23 as the go-live date for bitcoin, bitcoin cash, ether, and litecoin, co-founder and chief marketing officer Thomas Flake told CoinDesk. In anticipation of the launch, it has obtained money transmitter licenses in eight states, with 20 more applications pending, Flake said.

Among the first states where Bcause will be available are Illinois, Virginia, Washington and Texas. Bcause has also applied for New York’s BitLicense, but the team doesn’t expect to launch in the state any time soon as the process can take up to two years, Flake said.

Bcause also registered as a money services business with the Financial Crimes Enforcement Network (FinCEN). And earlier this year, the firm announced that it would be using Nasdaq’s matching engine, clearing and market surveillance tech when it launches trading.

Ultimately, Bcause aims to be a one-stop shop for crypto mining and trading, including derivative contracts, and it’s applied to the Commodity Futures Trading Commission (CFTC) to become a registered designated contracts market and a designated clearing organization. This is going to take some time, too, so the futures market will be launched later. The company is served by a “bank in Illinois,” Flake said, declining to name it.

It entered bankruptcy proceedings last month after a supplier of equipment to its mining facility tried to garnish its bank account, according to a letter to shareholders explaining the Chapter 11 filing. The resulting freeze of those funds caused the company to fall behind on payments to utility Dominion Energy, which is its largest creditor, owed $1.5 million.

However, the company’s general counsel told Crain’s Chicago Business it is continuing operations and seeking to restructure, not liquidate. Companies regularly emerge from Chapter 11, sometimes as quickly as a few months.

When asked about the situation, Flake said: “We continue to move forward with the process and at this point all creditors have shown a willingness to work together for a positive outcome.”

Bcause also took advantage of the Prairie State’s “substantial history in the derivatives market and a good pool of talent,” Flake said; in December it quietly hired George Sladoje, a former executive vice president of the Chicago Board of Trade and Chicago Stock Exchange, and later a COO of a Nasdaq subsidiary, OMX Commodities Clearing Company. Sladoje is now Bcause’s chief financial officer.

More certainty for miners

Currently, Bcause operates a data center in Virginia Beach, Virginia where it hosts miners for clients. It believes combining this service with spot and eventually derivatives trading will give customers more confidence: they will be able to sell the crypto they mined on Bcause’s facility easily on the spot market or secure futures contracts to sell them later at a comfortable price.

Flake explained:

“You get rid of some of the uncertainty, which makes investors much happier. If you go from saying, ‘I don’t know what the price of bitcoin will be in nine months,’ to saying, ‘I’ll be able to liquidate it because I have options at $6,500 in December next year,’ suddenly, a lot of uncertainty is off the table.”

This model will help make the mining business more attractive for financial institutions, Flake said.

Bcause is not mining crypto for itself at this initial stage; it’s only hosting customers’ miners. However, it’s investigating possible proprietary mining in the future, Flake said.

Right now, the data center in Virginia has miners with a joint capacity of 50 megawatts, mostly Antminer S9 machines manufactured by Bitmain. The demand for mining power is low now, Flake admitted, especially compared with a year ago:

“In the first quarter of 2018, we had to turn away $250,000 of contracts — we just didn’t have capacity. In the last quarter of 2018, that demand dried out completely. But in the last six weeks, we started seeing one or two inquiries a week.”

When the bitcoin price eventually rebounds to $7,000, demand for miners “will take off again,” Flake said.

In January 2018, Bcause struck a deal with the city of Virginia Beach, which granted $500,000 to the company for building the mining facility in town and creating new jobs there.

Bcause LLC mining farm image courtesy of the company

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CFTC May Approve Ethereum Futures, ETH Surges 8%

The U.S. Commodity Futures Trading Commission (CFTC) is willing to approve Ethereum futures contract provided they receive relevant applications …

The U.S. Commodity Futures Trading Commission (CFTC) is willing to approve Ethereum futures contract provided they receive relevant applications which tick all the required boxes.

I think we can get comfortable with an Ether derivative being under our jurisdiction,” said the CFTC Insider. “A derivatives exchange comes to us and says ‘we want to launch this particular product.’ … If they came to us with a particular derivative that met our requirements, I think that there’s a good chance that it would be [allowed to be] self-certified by us,” he added.

It is rumored that the CBOE (Chicago Board Options Exchange) May Be Gearing Up To Offer Ethereum Futures.

The news indicates:

  1. CFTC’s desire to approve a new relevant Futures Contract.
  2. Ethereum is positioned next to Bitcoin in the Futures Contract Pipeline.
  3. Ethereum contract would be a shot in the arm to the Ethereum Community.
  4. CFTC will have a regulatory hold on the Top 2 cryptocurrencies.

The CFTC has been showing an interest in Ethereum since last year, when, on December 11, 2018, it rolled out an RFI (Request for Information) to seek Public Comments on Ethereum’s Mechanics and Markets in order to better inform the Commission’s understanding of the technology, mechanics, and markets for virtual currencies beyond Bitcoin, namely Ether and its use on the Ethereum Network.

The RFI consisted of 25 questions on the below categories:

  • Purpose and Functionality
  • Technology
  • Governance
  • Markets, Oversight, and Regulation
  • Cyber Security and Custody

It is to be noted that, Bitcoin Futures was the first to be approved by the CFTC, when, on December 1, 2017, it published a statement that the Chicago Mercantile Exchange Inc. (CME) and the CBOE Futures Exchange (CFE) self-certified new contracts for bitcoin futures products, and the Cantor Exchange (Cantor) self-certified a new contract for bitcoin binary options.

The Bitcoin futures might have caused the Bull Run of 2017, however, it might have also lead to the Price Decline of Bitcoin (BTC) when the price dropped from 20000 USD to 6200 USD.

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ETH Spearheads Crypto Market on Encouraging Ethereum Futures News

Today, the cryptocurrency market is being spearheaded by Ethereum – the second largest cryptocurrency by market cap has seen an impressive 8.7% …

While cryptocurrencies can display strong swings without any apparent fundamental trigger, it’s possible today’s ETH run was catalyzed by positive news regarding the attitude of U.S. regulatory agency CFTC (Commodity Futures Trading Commission) towards the idea of Ethereum futures being traded on a regulated U.S. exchange.

CFTC-regulated Ethereum futures might not be too far away

Earlier today, CoinDesk published a report citing an unnamed CFTC senior official as saying that the agency would be comfortable with approving an ETH futures contract for trading if it meets the agency’s requirements:

“A derivatives exchange comes to us and says ‘we want to launch this particular product.’ … If they came to us with a particular derivative that met our requirements, I think that there’s a good chance that it would be [allowed to be] self-certified by us.”

Let’s recall that late last year, the CFTC requested public feedback on both Ethereum as a public blockchain network and ETH as a digital asset.

While the first Bitcoin futures contracts approved by the CFTC already went live in December of 2017 on both the CME and CBOE exchanges, the context is slightly more complicated when it comes to Ethereum. Bitcoin is almost universally being viewed as a commodity, while a case can be made that ETH is a security – unlike BTC, which anyone was able to mine from the start, ETH was initially offered through an initial coin offering (ICO).

Still, even though the SEC, the chief U.S. securities regulator, hasn’t come out with a definitive stance on Ethereum, the director of the agency’s Division of Corporation Finance, William Hinman, stated in a June 2018 speech that he does not believe that ETH is a security in its current state.

If a regulated Ethereum futures contract does indeed come to the U.S. market, it has the potential to open up the market to a class of investors that are not comfortable with existing marketplaces for speculating on the price of ETH.

The demand for crypto futures is certainly there – even though CBOE has decided to stop offering new Bitcoin futures, its larger competitor CME saw record trading volume on its cash-settled Bitcoin futures just a month ago with around $546 million in notional trading volume in a single day.

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Ether futures contract coming soon, more Bitfinex drama, PepsiCo tries out blockchain

1, 2017, the agency gave the green light to bitcoin futures markets to launch on both the CME Group and the Cboe Global Exchange. Now the CFTC …

Ethereum Futures Contract

The US Commodity Futures Trading Commission (CFTC), an independent agency that regulates futures and option markets, may soon approve an Ethereum (ETH) futures contract, according to an anonymous senior official familiar with the matter.

On Dec. 1, 2017, the agency gave the green light to bitcoin futures markets to launch on both the CME Group and the Cboe Global Exchange. Now the CFTC could be willing to oversee a similar product for ether.

The official explained:

“I think we can get comfortable with an ether derivative being under our jurisdiction. We don’t do bold pronouncements, what we do is we look at applications before us. A derivatives exchange comes to us and says ‘we want to launch this particular product.’ … If they came to us with a particular derivative that met our requirements, I think that there’s a good chance that it would be [allowed to be] self-certified by us.”

The only way the regulator would respond positively to a specific application is if it is submitted in a manner that is compliant with the appropriate regulatory guidelines. If proposed and approved, the ETH futures contracts will be accessible to a wide range of institutional investors.

Bitfinex Continues to Lead the News

Reggie Fowler, the former owner of the Minnesota Vikings, was supposedly involved in processing unregulated transactions on behalf of Bitfinex.

A statement put up by the US Department of Justice details that:

“Reginald Fowler and Ravid Yosef allegedly ran a shadow bank that processed hundreds of millions of dollars of unregulated transactions on behalf of numerous cryptocurrency exchanges. Their organization allegedly skirted the anti-money laundering safeguards required of licensed institutions that ensure the U.S. financial system is not used for criminal purposes, and did so through lies and deceit.”

Mr. Fowler has now been charged with bank fraud, as well as operating an unlicensed money transmitting business.

Pepsi on the Blockchain

PepsiCo, an American multinational food, snack, and beverage corporation, has conducted a trial to determine whether blockchain technology could address industry challenges in the automated buying and selling of online advertising space, which brought a 28 percent boost in supply chain efficiency.

PepsiCo’s project partner and media agency Mindshare announced that the trial was performed using Zilliqa’s blockchain platform, which automated various supply chain processes.

According to Mindshare, the results demonstrated a higher efficiency when implementng the process using smart contracts – in terms of costs for viewable impressions against one without.

“These smart contracts reconcile impressions that are delivered from multiple data sources with payments facilitated using an internal Native Alliance Token (NAT) all in near real time, resulting in major efficiency gains and complete transparency for the brand owners.”

Farida Shakhshir, PepsiCo’s director of consumer engagement for the Asia, Middle East and North Africa regions, also emphasized:

“The results are encouraging, and we plan to run a few more campaigns under different conditions to verify more hypotheses and measure overall impact.”

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