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Late 2017 will long be remembered as the time when bitcoin went mainstream. Prices were mooning, and the general atmosphere was one of fear of missing out. That sentiment was especially true in trading circles, and more traditional outlets were experimenting with cryptocurrency divisions in order to take advantage. One such experiment went sour, as a trader attempted to play upon relative company ignorance by shorting bitcoin and covering personal margin calls, with the affair ending in million dollar losses and a first of its kind federal prosecution.
Also read: Citibank India Bans Bitcoin
Bitcoin Trader Faces 20 Years in Prison
Consolidated Trading, LLC’s Joseph Kim, according to federal authorities, emailed, “Until the end I was perversely trying to fix what I had already done. I can’t believe I did not stop myself when I had the money to give back, and I will live with that for the rest of my life. You have every apology I have to give, I am sorry to betray you all like this.”
John R. Lausch Jr, United States Attorney for the Northern District of Illinois in conjunction with the Federal Bureau of Investigation (FBI), insists Mr. Kim “worked as an assistant trader for…a Chicago trading firm that recently formed a cryptocurrency group to engage in cryptocurrency trading…Over a two-month period in the Fall of last year, Kim misappropriated at least $ 2 million of the firm’s Bitcoin and Litecoin cryptocurrency for his own personal benefit, and he made false statements and representations to the company’s management in order to conceal the theft.”
According to reports, Mr. Kim had previous experience in cryptocurrency by way of working in South Korea for a time after graduating from the prestigious University of Chicago. He joined Consolidated in the Summer of 2016 as an assistant bond trader. Employees describe him as having gone by the online name “degen,” as in ‘degenerative gambler’.
It’s the first federal criminal prosecution of its kind in Chicago, and Mr. Kim, 24, is being charged with one count of wire fraud punishable by up to 20 years in prison. U.S. v. Kim, 18-cr-107, states “from September through November 2017, Kim transferred more than $ 2 million of the trading firm’s Bitcoin and Litecoin to personal accounts to cover his own trading losses, which had been incurred while trading cryptocurrency futures on foreign exchanges.”
Attempting to Cover Tracks
By Fall of 2017, Mr. Kim was made part of a cryptocurrency wing of Consolidated, moving from its bond division. That was a heady time for crypto, especially bitcoin, and price action steeped to unheard of highs. Mainstream trading outlets were itching to be part of the market. Shortly after, the complaint alleges, Mr. Kim moved nearly 1,000 litecoin from company coffers to his own, an “intermediary holding space” he reportedly offered as excuse for the unorthodox maneuver due to Bitfinex exchange issues. Something like that, according to prosecutors, was also done with bitcoin, to the tune of 3.2 million USD, as a way to cover personal losses (1.2 million USD was eventually returned).
When questioned at the time by company officials, Mr. Kim is reported to have claimed he returned at least the litecoin (his alleged dealings in bitcoin hadn’t been discovered). When Mr. Kim was suspected of mishandling bitcoin, he again offered excuses that the company increasingly worried were not adding up, though Mr. Kim seemed to assure all was well. By late November, 280 bitcoin were suspected missing.
What seems to be clear is Mr. Kim used bitcoin for personal trading, and Consolidated and federal authorities believe he stole over 280 bitcoin at one time or another. Though he did manage to transfer some back, inevitably losses began to add up. Mr. Kim reportedly admitted to the company he indeed transferred 55 bitcoin from the company to his personal wallet. He also allegedly came forward to explain he was trying to short bitcoin, at times converting litecoin for that purpose. There are also allegations he used company bitcoin accounts to help cover margin losses.
As it stands, Consolidated was able to recover some 144 bitcoin, but claims to have lost as much as 600,000 USD as a result of Mr. Kim’s doings. Mr. Kim and his attorney have not been made available for comment. He is expected to face a federal judge today, 16 February 2018, in order to enter a plea.
What are your thoughts on this federal case? Let us know in the comments section below.
Images courtesy of Pixabay, LinkedIn, DOJ
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The post Trader at Chicago Firm Stole Millions in BTC – Faces 20 Year Sentence appeared first on Bitcoin News.
The largest free economic zone in the UAE, with zero percent personal and corporate income tax, has started issuing licenses to firms trading cryptocurrencies. The first license has been issued to a gold trader that has recently started offering cryptocurrency services.
Attracting Crypto Businesses
The Dubai Multi Commodities Centre (DMCC) is a government entity established in 2002 to enhance commodity trade flows through Dubai. DMCC Free Zone is the largest and fastest growing free economic zone in the UAE.
“We perform a range of roles which continue to position Dubai as the preferred destination for global commodities trade and DMCC as the world’s No.1 Free Zone,” offering zero percent personal and corporate income tax, the center’s website states. Today, more than 14,100 multinational corporations and startups call DMCC home, with almost 90,000 people living and working there.
The Centre has started issuing licenses to allow firms trading in cryptocurrencies to operate from its free zone, Thomson Reuters Zawya reported on Monday.
DMCC’s executive director for commodities, Sanjeev Dutta, told the publication that the Centre is “beginning to facilitate” a market in cryptocurrencies which, he acknowledged, is unregulated. Citing that firms looking to set up in the zone would be considered on a “case-by-case” basis, he elaborated:
To me, what is important is the fact that you are still evaluating it as part of your innovation strategy. You are not saying ‘no’ to something. You are not saying ‘yes’ either, but you are exploring, so you are clearly ahead of the others when the time to make a decision comes.
Cryptocurrencies as Commodities
DMCC is a member of the Global Blockchain Council, which began as a Dubai Smart City project and has 46 member organizations globally today. The Centre’s director of innovation hub, Franco Bosoni, said that a global consensus is emerging which favors classifying cryptocurrencies as commodities, the news outlet detailed and quoted him explaining:
DMCC’s view is that these [cryptocurrencies] meet the test of a commodity. They’re priced based on supply and demand, produced and sold globally at a uniform quality and (are) indistinguishable between products.
Wai Lum Kwok, head of capital markets for Abu Dhabi Global Markets Regulatory Authority, told the publication on Sunday that the regulator is “reviewing and considering the development of a robust, risk-appropriate regulatory framework” for crypto exchanges and intermediaries. Emphasizing that no timeframe has been set, he added:
As we develop our framework, we will also want to check in and have the conversations with, for example, US regulators, Japanese regulators and so on and so forth, so that there is some alignment of approach to avoid any regulatory arbitrage.
First License Issued
The first license for the Free Zone reportedly went to Regal Assets, a gold trader and storage provider with offices in the US, Canada, and the UAE. The company added cryptocurrencies to its product line at the end of last year, offering brokerage services and an insured, high-security cold storage service for bitcoin, ether, bitcoin cash, ethereum classic, ripple, and dash.
According to Bloomberg, “Dubai gold trader Regal RA DMCC is the first company in the Middle East to get a license to trade cryptocurrencies.” The news outlet quoted DMCC acknowledging in a statement, “The company will offer storage of bitcoin, ethereum and other cryptocurrencies in a vault located in DMCC headquarters in Almas Tower in Dubai.”
DMCC Executive Chairman Ahmed Bin Sulayem was quoted by the publication, “At the heart of DMCC’s long-term strategic growth plan is the use of technology and innovation to disrupt and connect new markets, industries and customers,” adding that “the announcement today embodies this approach.”
Do you think more crypto companies will move to this free economic zone? Let us know in the comments section below.
Images courtesy of Shutterstock and DMCC.
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Another government contract to provide relief to Puerto Rico after Hurricane Maria is coming under scrutiny. The reasons, as spelled out in the New York Times , are pretty clear: FEMA awarded a one-woman company out of Atlanta—a firm that had zero experience in large-scale disasters—a $ 156 million contract…
The Chinese tech giant Cheetah Mobile has announced this week it just launched a new multi-cryptocurrency wallet that stores bitcoin core (BTC) and ethereum (ETH). The firm’s ‘Safewallet’ features a three-tiered security defense system with an intuitive interface.
Cheetah Mobile Introduces BTC/ETH Compatible Wallet
Cheetah Mobile is a mobile internet provider and application producers based out of Beijing China. The company is the creator of some of the world’s most popular mobile applications and as of January 2017, the company boasts 634 million monthly users. The firm’s cryptocurrency wallet platform will hold BTC and ETH using a three-tiered security system that monitors user behavior, phone security, and asset management.
“The app allows users to easily and safely send and receive assets, create and manage multiple wallets, and import wallets in a variety of formats,” Cheetah Mobile explains.
Safewallet has no access to your private key and may not, under any circumstance, initiate a transaction using your private key on your behalf.
Cheetah Thinks the Company Will Have a Strong Impact on the Crypto-Environment
The company also details that the new offering uses an “optimized transaction fee algorithm to reduce transaction fees and confirmation times.” Cheetah Mobile says the team of developers who created Safewallet has provided security services for millions of users who utilize apps like Clean Master and Security Master.
“Cheetah Mobile’s move into the blockchain industry represents a significant moment for our company,” said Edward Sun, SVP of Cheetah Mobile during the launch.
Similar to our AI strategy, we are committed to staying at the forefront of the latest technological trends, and mobile asset security is an area that we believe we can have a strong impact.
Another unique feature within the Smartwallet interface is the ‘safety keyboard’ which protects from key-logging and data breaches. Smartwallet is currently available for Android users via the Google Play store and Cheetah Mobile says iOS is on its way. Additionally, the company says the wallet will support ERC-20 tokens and other cryptocurrencies in the near future.
What do you think about Cheetah Mobile’s cryptocurrency wallet? Let us know in the comments below.
Images via Shutterstock, Cheetah Mobile, and Smartwallet.
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Calabasas staffing firm On Assignment Inc. will acquire government services contractor ECS Federal in a $ 775-million cash deal, the two companies said Wednesday.
Shares of On Assignment were up 9.3% at $ 75.31 around 9:45 a.m. PST.
Founded in 1985, On Assignment began as a lab support staffing agency…
Financial regulators around the world seem to finally notice that some companies are trying to capitalize on the insatiable appetite for everything crypto by claiming a link to blockchain. Trading in the stocks of one such alleged company has now been stopped by the SEC.
Wait a SEC
The US Securities and Exchange Commission (SEC) has announced the temporary suspension of trading in the securities of UBI Blockchain Internet, Ltd. (OTCMKTS: UBIA), of Hong Kong, China on January 8, 2018. Last we reported two weeks ago it was worth about $ 1.2 billion after its stock jumped in value about 1,000% in 2017.
The SEC explains it suspended trading in the securities of UBI because of “(i) questions regarding the accuracy of assertions, since at least September 2017, by UBIA in filings with the Commission regarding the company’s business operations; and (ii) concerns about recent, unusual and unexplained market activity in the company’s Class A common stock since at least November 2017.”
Everything is Blockchain, Nothing is Blockchain
UBI claimed in its SEC filings that it is developing a solution based on blockchain technology “to trace a food or drug product from its original source within the context of the Internet of Things to the final consumer.” However, it is not clear at all that the company had any ability to actually try and deliver on this promise.
Prior to changing its name to to UBI Blockchain Internet in November 2016, the company was supposed to be designing a suite of modular, self-contained, automated, and climate controlled units for distributed production of energy. It also does not have any significant operations and just 18 employees, according to records at Yahoo Finance.
What might have triggered the SEC to act, beyond the negative press coverage, is UBI management’s plans to sell an extra 72.3 million shares owned by its top executives. Could this serve as a sign for other “blockchain” named companies to not try to sell stocks when they are at their peak price based on hype alone?
Was the SEC right to stop trading on UBI? Tell us what you think in the comments section below.
Images courtesy of Shutterstock.
The post SEC Suspends Trading in Blockchain Firm With No Revenues and No Product appeared first on Bitcoin News.
Just recently we reported on the beverage firm Long Island Iced Tea Corp and its share price increase by more than 400% immediately after it rebranded to “Long Blockchain Corporation.” On January 4, the company filed with the U.S. Securities and Exchange Commission (SEC), stating its intentions to mine bitcoins and purchase 1,000 Bitmain manufactured Antminer S9 mining rigs.
The Iced Tea Company Is Shifting Gears With Plans to Mine Bitcoin
The specialized drink company, ‘Long Island Iced Tea Corp,’ is now known as the ‘Long Blockchain Corporation’ (LBC), and it seems the firm had other intentions for changing its name. The company made headlines all over the world when it rebranded, and its shares spiked by 432 percent in a single day. The latest business move shows LBC is planning to operate a mining facility located in the Nordic country, as the delivery of miners shows an Iceland destination. However, it’s unconfirmed at the moment precisely where the mining facility will be located.
“The mining equipment will be installed in a world-class third-party data center experienced in cryptocurrency mining and located in a Nordic country — Long Blockchain expects to benefit from an established infrastructure and competitive energy costs using geothermal and hydro-electric power sources,” explains the firm’s announcement.
Generating Revenue Through the Accumulation of Bitcoin
The firm’s CEO, Philip Thomas, explained the company’s business transition in a statement saying, “We view this transaction as an important and validating initial step in the company’s progression into blockchain technology.”
The commencement of our mining operations places us on a path to generating revenue through the accumulation of bitcoin — This platform will help support our longer-term strategy of engaging in partnerships, investments and acquisitions in the blockchain ecosystem.
Long Blockchain Will Join Other Bitcoin Miners That Have Congregated In the Nordic Region
The initial rebrand announcement revealed the company’s intentions to pivot its business model. “We will, in the coming weeks and months, be taking a series of steps related to our efforts to assemble a world-class team of industry professionals to help us realize this vision,” explained Thomas last month.
The purchase and sale will close on the 31st day of January 2018, and the cost of the 1,000 Antminer S9 mining rigs and 1,000 PSUs will cost $ 2,900,000 USD. Alongside this, the deal filed with the SEC also includes the issuance of two hundred and sixty thousand shares of company common stock.
The Nordic region is known for businesses congregating in the area to mine bitcoin most notably in Iceland. The reason for this is because of the Nordic region’s abundant resources in geothermal and hydro-electric power. Other mining businesses located within the territory of those countries include Genesis Mining, Bitfury.
What do you think about this drink company changing gears to start a mining facility in the Nordic region? Let us know in the comments below.
Images via Pixabay, Long Island Iced Tea, and Bitmain.
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The post Former Iced Tea Firm Plans to Mine Bitcoin in the Nordic Region appeared first on Bitcoin News.
Two weeks after a law firm said lab tests found cancer-causing asbestos in makeup from Claire’s, the girls cosmetics and accessories retailer said lab tests it funded proves that the makeup is asbestos-free.
Claire’s said it will still honor returns from customers feeling uneasy about any of the…
An application for a class action lawsuit against Apollo Power (TASE: APLP) has been submitted to the Tel Aviv District Court. The solar energy technology company is accused of misleading investors by making a false report. The matter at hand is how its share price jumped by 150% on December 18 after Apollo announced it entered the cryptocurrency mining business.
Class Action Lawsuit
Apollo Power, its chairman, CEO and directors are accused of gravely misleading investors by making an immediate report to the TASE which had crucial missing details. According to the application for a class action lawsuit, the accused “identified an attractive trend called blockchain.”
So, at the morning of the 18th, the company made a dramatic breaking announcement regarding an experiment in mining cryptocurrencies with its system. Investors were led to believe this was a breakthrough that will save significant electricity costs for miners, making the system more valuable.
With bitcoin at over $ 19,000 and ether close to $ 800 that day, the stock price of Apollo shot up in price from 4.3 shekels to over 10 shekels immediately after this first report, as many investors regarded the announcement as credible and bought the stock. However, just six hours later Apollo made a second report which made it clear, according to class action application, that the first announcement was, “partial, false, misleading, fake, fraudulent and at the very least negligent.”
Bitcoin Verbal Gymnastics
Apollo was forced by the Israel Securities Authority to issue its second announcement on the December 18, which revealed its earlier report was missing many crucial details. According to its accusers, the company used artistic verbal gymnastics to jam in the word bitcoin into the report “in order to motivate investors to buy the stock.” The ISA is already separately investigating the matter on its own, as we reported last week.
The second announcement revealed that the half hour experiment produced just 0.000054 ETH worth about 4 cents at the time. Furthermore it was made clear that the system can only mine about 35 cents worth of altcoins a day, and no bitcoin at all. There are also yet unestimated extra costs for mining with the system, while the original announcement said that the breakthrough can create a substantial additional income source for users. The class action lawsuit application thus accuses the company of causing great financial losses to the group of investors who bought it after the first report.
Should stock investors trust any firm that starts claiming to have some connection to bitcoin or it is all just pure hype? Tell us what you think in the comments section below.
Images courtesy of Shutterstock.
The post Public Firm Faces Class Action Lawsuit for Falsely Claiming Link to Bitcoin appeared first on Bitcoin News.