Malta Needs to Up Its AML Game As Crypto Sector Grows, Says EU

Malta Needs to Up Its AML Game As Crypto Sector Grows, Says EU

Malta needs to increase its levels of anti-money laundering (AML) policing to match the growth in financial services, according to the EU. As reported by Malta Today, the European Commission said the island jurisdiction’s moves to boost its cryptocurrency sector, alongside sizable financial and gaming industries, mean an effective AML regime is required. The comments came in recommendations made to EU member nations regarding spending of EU funding. The commission said that it was “positive” that Malta’s Financial Intelligence Analysis Unit had seen increases in budget and staffing levels, and other procedures had been ramped up. However, it sees scope for government failings that could affect Malta’s business prospects. The commission said: “Governance shortcomings, particularly in the fight against corruption, may also adversely affect the business environment and weigh negatively on investment. In particular, there is a risk of conflict of interest at various levels of government. Further, it said the Malta Police Force’s Economic Crimes Unit is not adequately staffed, according to the report. “In this context, it is important to couple a strengthened legislative framework with timely and thorough implementation,” said the commission. Malta has been actively working to create a friendly regulatory regime for the blockchain and cryptocurrency industry. To that end, the island’s government passed several pieces of legislation last summer that have since seen notable crypto exchanges such as Binance and OKCoin open offices there. The nation has already been taking some steps to more effectively spot suspect crypto activity. Last month, the Malta Financial Services Authority (MFSA) announced that it would integrate CipherTrace’s Compliance Monitoring product to “protect consumers, investors and business partners.” The tool uses blockchain analytics and forensics to look out for “suspicious” addresses and wallets, according to CipherTrace’s website. The firm says it profiles cryptocurrency exchanges, ATMs, coin mixers and money laundering systems, as well as known criminal addresses, to score transactions and gauge the level of risk. The MFSA said the system also de-anonymizes blockchain addresses, allowing regulators to “evaluate and monitor the trustworthiness of virtual asset businesses.” Malta and EU flags image via Shutterstock

There’s 100 Unclaimed Bitcoin Cash Wallets Hidden Worldwide

There’s 100 Unclaimed Bitcoin Cash Wallets Hidden Worldwide

Over the last few months, the geocaching treasure hunt Findbitcoin.cash has gathered a bunch of new hidden BCH treasures. At the time of publication, there are approximately 105 concealed bitcoin cash wallets hidden all over the world with a large portion of these funds hidden in the U.S. and Australia. Also read: Bitcoin.com’s Local Bitcoin Cash Marketplace Is Now Open for Trading Hide Treasures or Become a BCH Scavenger With Findbitcoin.cash Bitcoin cash supporters have seen a ton of innovative projects over the last few months and some of them have given people a new and fun experience to play around with. One initiative called Findbitcoin.cash gives people a sense of adventure because it allows them to both hide and search for BCH wallets anywhere in the world. Geocaching treasure hunt games have been extremely popular over the last few years and the creators of Findbitcoin.cash have brought the trend to the BCH ecosystem. The platform gives people basic directions on how to print a bitcoin cash-loaded paper wallet and hide it in an obscure location. The website provides its own paper wallet generator, which creates a random public and private key pair for the creator. If a person decides to hide a bitcoin cash wallet using the platform they will need the public key in order to add it to the Findbitcoin.cash listings along with a hint about where the treasure can be found. The BCH geocaching service recommends that people hiding BCH loot should print two copies of each wallet they are going to hide. This way if anything happens to the wallet, from say the weather or an animal, they can sweep the wallet later after they are satisfied it was compromised by the elements or too long has elapsed and the wallet was never found. Findbitcoin.cash also recommends that people use a plastic ziplock bag to protect the paper wallet from the weather or the hider could laminate it too. After creating the paper wallet, you can create a listing that gives people a description of the area where you hid the funds and you can add a few pictures as well of the surrounding location. For instance, there’s this BCH hidden treasure taped to the Amway sign in front of…

Japan: Tax Authorities Say Crypto Traders Owe Them $93 Million

Japan: Tax Authorities Say Crypto Traders Owe Them $93 Million

Japan-based entities have failed to report their crypto gains valued at 10 billion yen ($93 million) over the past several years by March 2019, local national newspaper Asahi Shimbun reports on June 5. According to Asahi, about 30 crypto-related businesses and 50 individuals have not declared their revenues from cryptocurrency trading as of March, allegedly due to a high tax on this type of income. To date, Japanese tax regulators reportedly consider crypto-related revenues as miscellaneous income, which is taxed at 55%. In accordance with the current law, local entities who earn more than 200,000 yen ($1,850) in such income on an annual basis are required to disclose it, the article notes. As previously reported, in order to combat tax evasion in the industry, the Japanese government is preparing a new system that will authorize the National Tax Agency (NTA) to request revenue information from crypto exchanges, including names and addresses. Expected to be introduced in April 2020, the new law will allow the NTA to request data primarily for those users whose earnings from crypto amounted to more than 10 million yen ($88,700). Asahi adds that the new system will be launched in January 2020, and it will also authorize the Japanese government to penalize those exchanges or crypto operators who fail to disclose the necessary information. Earlier this year, the Japan Association of New Economy (JANE) asked the Japanese Financial Services Agency (FSA) to consider reducing crypto taxes from the current 55% to 20%. The association has also asked the regulator to impose no taxation for crypto-to-crypto transactions. Meanwhile, Japan, which is reportedly ranked as the second country globally for traffic to crypto exchanges after the United States, has recently passed new crypto regulation in the upper house of the parliament. The lower house suggested legal amendments intending to tighten local regulations on cryptocurrency trading activity, including margin trading.

Judge Freezes Funds in Accounts Belonging to Embattled Brazilian Crypto Firm

Judge Freezes Funds in Accounts Belonging to Embattled Brazilian Crypto Firm

A Sao Paulo court has blocked funds in bank accounts linked to Grupo Bitcoin Banco — with 726,630 reals (about $188,000 at press time) frozen, Cointelegraph Brazil reported on June 5. Two people, along with one company, have accused GBB of engaging in abusive practices after they were unable to make conversions back into reals or withdraw funds to their bank accounts because of a temporary suspension on transactions. The trio claimed they have a total 726,630 reals on GBB’s platform and urged a judge at the Court of Justice of the State of Sao Paulo to take urgent guardianship of their funds. In their ruling, a judge agreed — and said there is a “danger of harm” because the plaintiffs could lose their funds altogether. GBB can appeal the decision. GBB has recently been embroiled in a security breach that saw some customers double the balances of their accounts and withdraw money that did not exist, Cointelegraph Brazil reports. The cost of the scam could amount to 50 million reals ($13 million.) On Monday, the company — which owns exchanges including NegocieCoins and TemBTC — announced it had identified 19,896 fraudulent transactions and suspended 2,568 suspicious accounts. GBB has said that it is committed to fulfilling withdrawal requests, but some customers have expressed frustration after experiencing delays. On May 31, Brazil’s Chamber of Deputies requested the creation of a special commission to consider cryptocurrency regulation in the country.

Apple’s CryptoKit Launch Paves the Way for Secure Mobile Wallets

Apple’s CryptoKit Launch Paves the Way for Secure Mobile Wallets

Apple is set to launch CryptoKit, a Swift API to perform basic cryptographic operations on its upcoming iOS 13 software release. The announcement came during the tech giant’s Worldwide Developers Conference. According to Apple, the new framework will integrate options for hashing, key generation and exchange, and encryption for developers on iOS apps. The new framework will supplant Apple’s previous framework, CommonCrypto, which does not support Swift. CryptoKit will allow developers to avoid lower-level interfaces by freeing developers from managing raw pointers and automatically overwriting sensitive data during memory deallocation, according to the company. Encryption will be possible for data at rest or in transit. The common key operations will include computing and comparing cryptographically secure digests, using public-key cryptography to create and evaluate digital signatures, and generating symmetric keys for message authentication and encryption. While the new framework features more hash functionality, like support for SHA256, it will not support the secp256k1 curve used by Ethereum and other blockchains. This means that CryptoKit has limited implications for cryptocurrencies at this stage but crypto fans aren’t ruling it out. Others, obviously, are less optimistic. “YOUR IPHONE WILL NOT BE A HARDWARE WALLET,” said programmer Ronald Mannak‏ on Twitter. 5. The documentation suggests the SE still only supports the secp256r1 (aka prime256) curve, not the secp256k1 curve used by Ethereum and other blockchains. Unless that changes in a future hardware upgrade, YOUR IPHONE WILL NOT BE A HARDWARE WALLET. — Ronald Mannak (@ronaldmannak) June 4, 2019 Ouriel Ohayon, co-founder of ZenGo, concurred. “For now [CryptoKit] is pretty much useless for cryptocurrencies because, one, it does not use the relevant elliptic curves for blockchains, and two, there is no access to the secure enclave to export and migrate private keys if you need to,” he said. Striking a positive note, Ohayon said, “I do anticipate [Apple] to go that route a few years from now and it will make the industry a lot better.” Image via Shutterstock.

$1 Billion Valuation May Elude Ethereum Co-Founder’s New Blockchain Polkadot

$1 Billion Valuation May Elude Ethereum Co-Founder’s New Blockchain Polkadot

Blockchain project Polkadot’s bid for a $1.2 billion valuation has hit a snag. Since January, the Web3 Foundation, the Switzerland-based nonprofit behind the project, has been trying to raise up to $60 million through a private token sale. According to people familiar with the situation, three Chinese funds have agreed to invest $15 million in the project’s DOT tokens. However, these three investors agreed to pay prices that, on average, valued the project below $1 billion, the sources said – falling short of the unicorn threshold Polkadot was reportedly seeking. (The agreed-to prices may vary from investor to investor.) While it’s unclear how many tokens the three Chinese funds bought, or how many investors besides them participated, one source said Polkadot has been able to sell only 70 percent of the intended 500,000 DOT. Rather than closing the private round now, Polkadot will continue trying to sell the remaining tokens to accredited investors and distributing them freely to community contributors, sources said. Assuming other investors participate at similar valuations to the three funds, selling the remaining 30 percent would not bring in the targeted proceeds. To raise the full $60 million, then, Polkadot would need to increase the allocation of tokens for sale. In a statement, Web3 said it could not comment on any private sale, “but we’re looking forward to making that information public as soon as possible.” Proceeds from the sale are to be used for testing Polkadot’s mainnet, incentivizing developers and funding Web3 Foundation’s research and operations, sources said. Chain of chains Stepping back, Polkadot is one of the most hotly anticipated blockchains that have yet to launch. Created by Gavin Wood, co-founder of ethereum and founder of Parity Technologies, Polkadot aims to build a blockchain network that can enable other blockchains to work in conjunction with each other. A rival network with a similar goal of interoperability, Cosmos, launched in March. In a separate statement, Parity CEO Jutta Steiner said the firm is “excited about the new possibilities Polkadot brings to the table,” adding: “True interoperability delivered in a scalable, governable protocol has real potential to push the dream of an open internet forward. We’ve been hard at work over the past year building [custom-blockchain platform] Substrate and development on Polkadot has progressed…

Belarus General Prosecutor Warns About Cryptocurrency’s Use in Tax Evasion

Belarus General Prosecutor Warns About Cryptocurrency’s Use in Tax Evasion

Belarus’ general prosecutor has raised concerns about the role cryptocurrency could be playing in tax evasion, local daily news outlet TUT.by reported on June 4. Speaking as Belarus hosted the International Prosecutors Association’s regional conference, Aleksandr Konyuk said the time had come for all attendants’ authorities to study cryptocurrency use. Belarus had become one of the first countries in the area to create formal legislation around bitcoin (BTC) and other cryptocurrencies, declaring them legal in 2017. “The relevance of cybercrime is obvious,” he told the conference, which saw representation from Russia, Georgia, Moldova, Poland, Kazakhstan and Latvia. Konyuk continued: “Multiple new understandings have emerged, and it is necessary to study the situation with bitcoin and cryptocurrency. These are things that are entering our lives. For example, cryptocurrency constitutes a serious risk for tax evasion.” The concept that cryptocurrency plays a major role in cybercrime continues to emerge from various governments, while critics play down the idea that it is becoming perpetrators’ go-to financing method. In line with the legal landscape, Belarus’ largest bank signalled in January that it was nonetheless interested in setting up a cryptocurrency exchange. In neighboring Russia, meanwhile, with which Minsk has unique economic ties, authorities continue to waver over how to deal with cryptocurrency use. Most recently, the country’s central bank said it was against legalizing bitcoin and altcoins for use as a payment instrument. Another lawmaker delivered a verdict similar to Konyuk’s in comments last month. In contrast to Belarus, the country’s major state-owned Sberbank said it was halting its own crypto plans due to the Bank of Russia’s negative stance.

Israeli Startup Launches First Non-Custodial Wallet Without Private Keys

Israeli Startup Launches First Non-Custodial Wallet Without Private Keys

The world has seen both hot and cold storage but now one company is bringing “chill storage.” ZenGo, a Tel Aviv-based firm, is promising the first non-custodial wallet without private keys, points of failure, or passwords, all with a custodian-grade experience. Following last years’ $4 million in seed funding from Samsung, Benson Oak, and Elron as well as three blockchain grants from Zcash, Tezos, and Zilliqa, ZenGo is going public with the mandate of simplicity and security. The decentralized security protocols along with distributed key management means there is no single point of failure, “seed phrase or mnemonic non-sense,” or hackable or sim-jacking based password system. “This is the first secure user controlled crypto wallet which can be adopted and used by anyone, removing the typical friction points you find in alternative solutions,” said Ouriel Ohayon, co-founder of the company. “Until now users had the choice between two poisons: be their own bank at the cost of complexity, human errors or hacks or trust a third party blindly (which they chose by default because it’s just easier but then lose total control).” Frustrated with the “overwhelming and tedious” state of crypto wallets when first entering to the industry, Ohayon and his partners aimed to give ZenGo users total control over their funds, without the annoyance of traditional wallet. Ohayon boasts his app’s simplicity in setup, account restoration, and password-less access. Additionally, ZenGo has been audited by Kudelski and AppSec, offers biometric encryption, and can guarantee funds will not be impacted if either a user’s phone or server is hacked. “Once we knew we could take the core principles of threshold cryptography and distributed computation and make it highly performant on the mobile, we knew we could build a step function improvement to whatever was existing,” said Ohayon. Furthermore, unlike multi-sig technology, ZenGo is blockchain agnostic and can support any asset. “After a few weeks of beta on iOS we already manage seven figures AUM in USD in our system,” he said. The platform is due to launch on Android in a few weeks, according to a representative. ZenGo early adopters will have a lifetime of free access. Once established the company plans to charge a subscription fee to new customers and add services that will generate…

Lightning Co-Creator Releases Code for Bitcoin Scaling Concept

Lightning Co-Creator Releases Code for Bitcoin Scaling Concept

Tadge Dryja, who co-authored the original paper underpinning bitcoin’s experimental lightning payments network, has released a new research paper outlining a proposed scaling solution that he’s been working on for the past year. Released Monday, Utreexo would make the part of bitcoin full nodes called the “state” (also known as the “UTXO set”) smaller and easier to run with the help of cryptographic proofs. Though the idea has been around since before CoinDesk first covered the idea in January, this paper describes the idea in greater technical detail. Dryja is known for being one of the most prominent technologists behind the “lightning” idea, that bitcoin can scale significantly if transactions are pushed to a second layer. Several groups of developers are working to implement the technology for bitcoin payments, though it’s still experimental and not completely safe to use. Utreexo has a similar motivation, which boils down to making bitcoin full nodes easier to run. Though they take some computing resources to set up, they’re the most secure way of using bitcoin, without needing to trust a middleman to verify that transactions on the network are real. “As the number of users of the system increases, the UTXO set grows, and the resource cost of running a node increases. This has led to a progressively smaller proportion of users running their own node as more users rely on light clients or on [third] party nodes to inform them of the state of the network,” the paper explains. As such, the paper outlines a way that nodes could use cryptographic proofs to store less data without compromising on security. “Nodes using the accumulator need only store a logarithmically sized representation of the UTXO set, greatly reducing storage space and disk seek times,” the paper states. The paper also reveals the results of simulations Dryja has run showing the benefits of the scheme. ”Since January I’ve implemented more code and made the code public on GitHub, and gotten performance numbers for bitcoin mainnet download sizes,” he told CoinDesk. Though, looking at these numbers, there is a small catch: although the storage requirements decrease overall, the proofs data increases the network bandwidth load. “In our simulations of downloading Bitcoin’s blockchain up to early 2019 with 500MB of RAM…

Why Darknet Drug Sales Are on the Rise

Why Darknet Drug Sales Are on the Rise

The public’s appetite for darknet drugs remains undaunted. A major new survey has shown consistent growth in online drug sales since 2014, with Scotland, Brazil and England leading the demand for narcotics procured off the darknet. Despite numerous darknet markets (DNMs) and supporting infrastructure including clearnet link sites and bitcoin mixers being shut down this year, business is booming. Also read: The Darknet Rises With 6 New Markets Why the Growth of Darknet Drug Sales Is a Good Thing Global Drugs Survey (GDS), the largest poll of its kind, has published its 2019 report into the state of the recreational drugs market. It questioned more than 123,000 people from over 30 countries. GDS findings include darknet drug purchases more than doubling in England since 2014, with 28.6% of respondents professing to having purchased drugs from DNMs. Bizarrely, GDS founder Dr Adam Winstock told the BBC that the greatest risk associated with buying drugs online involves extortion. “If you’ve given your name, somebody knows you’ve bought illicit drugs,” he said. “And then there’s a possibility that they will blackmail you.” There is no credible evidence to support this assertion. Moreover, the same reasoning, if it were true, could be applied to real world purchases of drugs. A selection of wares currently for sale on Nightmare market.While hard drugs such as heroin, crack cocaine, and xanax can be harmful, wherever they are purchased, the reputation system used on DNMs has been shown to build trust, minimizing the risks of purchasing narcotics that have been cut with harmful adulterants. Moreover, purchasing drugs online mitigates the threat of being robbed or sold diluted or fake substances. As a consequence, many drug users use DNMs not only for convenience, but also for safety. Irresponsible reporting by mainstream media such as the BBC has left the public dangerously misinformed, leaving the impression that darknet markets are the riskiest way to purchase drugs, when in fact the reverse is true. For technically competent web users, DNMs are safer in almost every way than buying on the street. What the Average Drug User Looks Like In the 2019 Global Drug Survey, 87% of respondents were white and 59% were male, with a mean age of 29. The most popular illegal drugs used in…