GSG News Update – May 10, 2019

*|MC:SUBJECT|*
View this email in your browser
INTERNAL USE ONLY
DO NOT DISTRIBUTE
 

GSG News Update

 

MarketWatch

May 10, 2019
 
Name Current Price 24h % 30d Vol 90d Vol 21d EMA 50d EMA
Bitcoin $6,346.19 4.06% 42.33% 51.38% $5,555.865 $5,108.989
Ethereum $174.68 2.03% 61.83% 75.69% $165.651 $159.096
XRP $0.300 0.00% 51.09% 60.12% $0.307 $0.314
Bitcoin Cash $292.29 1.72% 85.93% 120.95% $279.844 $254.621
Litecoin  $76.93 3.09% 78.39% 96.70% $75.221 $71.792
EOS  $4.90 -0.11% 70.84% 98.98% $5.041 $4.797
Binance Coin  $19.04 -6.94% 91.47% 91.31% $21.625 $19.754
Stellar $0.092 -1.92% 53.11% 73.01% $0.101 $0.104
Cardano $0.064 1.66% 70.84% 89.13% $0.069 $0.068

Notable Moves
Name Current Price Change (24h)
Bitcoin (BTC) $6,346.19 4.06%
Flight to safety in Bitcoin from fiat, altcoins, and usdt while altcoins suffer.

News

  • Congressman Brad Sherman calling for a bill to ban all cryptocurrencies. The House Democrat from California says he plans to introduce legislation that will make it illegal for Americans to buy and sell crypto assets.
  • DApps may qualify as money transmitters under U.S. law in certain circumstances, according to new guidance sheet published by FinCEN outlining when and how different companies, individuals and platforms in the crypto space may be money transmitters under the Bank Secrecy Act and other relevant laws. 
  • Michael Novogratz expects BTC to beat all-time-high price within 18 months. Said during an interview with CNN, he also said he believes $6,000 is probably a stall point, and next one will be $10,000. Moreover, he expressed the belief that this time, other cryptocurrencies "aren't going to go up nearly as quickly."
  • Hacker who stole $41 million from Binance has consolidated stolen bitcoin into just seven addresses. 7,070 BTC was moved from Binance’s hot wallet in a single transaction consisting of 44 outputs, 21 of them being Bech32 (Segwit) addresses. Hacker has since consolidated BTC from 44 addresses to seven: six at 1,060.6 BTC and one with 707 BTC.
  • Blockstream has announced Liquid Bitcoin (LBTC) is now available for deposits and withdrawals on Bitfinex as well as for conversion to BTC at a 1:1 peg. Liquid Bitcoin is the Bitcoin version that runs on Liquid, a permissioned blockchain controlled by 15 entities comprising mainly of exchanges. 
  • Bitfinex has received $1 billion in hard and soft commitments for its exchange token sale, according to Zhao Dong, who also said "there's a high possibility Bitfinex will not conduct a public sale" for its token offering LEO. 
  • GSR Capital has finally closed on investment in tZERO. Instead of buying $30 million of tZERO tokens, as previously agreed, the Hong Kong private equity fund invested just $5 million in tZERO equity. Finalized transaction values tZERO's at $1 billion, less than the $1.5 billion in the initial agreement.

Upcoming Events

  • May 10-11 - Ethereal New-York (Joe Lubin, Ryan Selkis, Laura Shin, Chris Burniske)
  • May 11-12 - Magical Crypto Conference (Elizabeth Stark, Adam Back, Peter Todd, Charlie Lee, Riccardo Spagni)
  • May 13-15 - Consensus 2019 (Jeff Garzik, Jameson Lopp, Dan Morehead, Hester Peirce)
  • May 31 - CME Bitcoin Futures May 2019 contract (BTCK19) last trade date; settlement June 5
  • Jun 25-26 - Bitcoin 2019 (Andrew Poelstra, Anthony Pompliano, Jihan Wu, Tuur Demeester)
  • Aug 6 - Litecoin Block Reward Halving (Coin reward decreases from 25 to 12.5 coins)
  • End of 2019 - Ethereum 2.0 Live (estimated date)
 

Charts

BTC Longs-Shorts

ETH Longs-Shorts

Market Cap Return

Sector Return

Twitter Daily

Ryan X. Charles‏ @ryanxcharles

US Government declares every Lightning Network node is a Money Services Business (MSB). Every LN wallet company will have to buy MSB licenses and comply with AML/KYC. Users will have to scan ID to use the wallet. https://bico.media/1f8e0c5f47b470f3df0f06f3d2939adccc1f2b7dafa0b4a32a69663cda2c6760.pdf …
 



Angry Beur @AngryBeur

1/4 So @cz_binance, do you recognize that the flaws, that makes #binance #hacked possible, have been reported to you 3 months ago by #infosec team of $PAC (@PACcoinOfficial)? #safu #cybersecurity #infosec #cyberattack #crypto #binance #binanceHack




2/4 Back in February, @pacpoker have warned @cz_binance and @binance about the #2FA Google auth security flaw with their app, and they have been told to… open a support ticket. #safu #cybersecurity #infosec #cyberattack #crypto #binance #binanceHack

3/4 So, the $pac team opened a case through the #binance bounty program, and it has simply been closed and thus ignored as you can see on the pictures (emails), without being fixed. #safu #cybersecurity #infosec #CyberAttack #crypto #binance #binanceHack



4/4 That kind of thing happens all the time and it is known that a lot of bounties are not taken seriously and not paid. #binance paid the price now... #safu #cybersecurity #infosec #cyberattack #crypto #binance #binanceHack


 

Just tried transferring BTC from @TheRockTrading to @bitfinex using @Blockstream Liquid, the transaction was executed and confirmed in less than 5 minutes, and best of all the amount is confidential to outside observers. Congrats to both exchanges and all other people involved 

Replying to @Federico_Xmas @TheRockTrading and 2 others

How much did you pay for the withdraw fee? Last time I tried it was the same as a normal BTC withdraw which didn't feel right

Bitfinex reports withdrawals through Liquid as free, The Rock Trading charged 0.0001 BTC which is the same as a normal withdrawal. I'm confident it will be decreased in the future.

Andrew Rennhack‏ @andr3w321

Take a wild guess as to when binance decided to halt deposits and withdrawals. Magically the bitfinex btc premium started to massively disappear. Probably just a big bit-coincidence I'm sure.




C3|Nik @C3_Nik

The masses are running towards the asset which is -currently- rising. By doing so, most do not take advantage of the pump, they are the pump. One reason why most people do not make money by definition.

The lack of price action in altcoins is hardly surprising when the largest exchange for altcoins @binance is essentially suspended for new capital inflows. Not the only reason of course. #opinion #crypto #bitcoin #ethereum #xrp #bch #ada #eos #digitalassets #cryptocurrencies

People who want to trade altcoins for Bitcoin can do so by selling their "altcoins" which are on Binance already. This creates selling pressure. The ones who want to put new capital into "altcoins" cannot do so because deposits are disabled. Net selling pressure. Just my opinion.

That is also why I hinted at possible impending price distortions due to the lockdown of @binance



Preston Byrne‏@prestonjbyrne 

Update: MakerDAO's stability fee is, indeed, a trash fire. "It was their responsibility to warn users that their loans are NOT suited for real-world use cases, and they might end up trapping users in the rates we see now.”

As I said 3 weeks ago: the MakerDAO "Stability Fee" is a misnomer. It is, rather, a penalty that props up the scheme by charging people to withdraw their money. And it's set by MKR whales.

Can we stop calling the DAI "stability fee" a "stability fee?" It's a withdrawal penalty that disincentivizes people from closing out their positions and ceasing to use the system.

The reason the reserve ratio hasn't crept up (currently 150%) is because it's already insane to tie up 150 of cash collateral to get 100 in cash, and increasing that ratio will only make that calculus more insane.

All of these stablecoin systems are being designed as one-way ratchets - make it easy to get in, but pay dearly to get out. Only makes sense if you want to lever existing crypto holdings to go long on crypto. Such a system will work until it doesn't.

"Closing out my CDP will result in a loss, the stability fee has been 75% for 6 months and I am still willing to take the hit to get what I can out of this trash fire." That's called a fire sale. You can only prop up an asset so long.
 



Jimmy Song‏ @jimmysong

It's rare to see a US politician admit to what's been known around the world, but obscure to most in the US. The dollar hegemony that the US enjoys is what gives it much of its power. We're in the "then they fight you" phase. @BradSherman, I'm around if you ever want to talk.




Marco Santori‏ @msantoriESQ

1/  Today, the US Treasury published MASSIVE new guidance on crypto regulation. It has *major* implications for wallets, exchanges, ICO issuers, dApps, DEXes... OH MY  (um I'm gonna tweet about it)

2/ The best way to understand this official guidance is the following: FinCEN cares deeply about your financial privacy, so long as nothing is private from FinCEN.

3/ Why? FinCEN (Financial Crimes Enforcement Network) is the bureau of the Treasury tasked with preventing terrorist financing, money laundring, and other nasty stuff. They're happy with you living your life as you see fit, so long as they get the data they need to stop bad guys.

4/ FinCEN is a big data agency. They scoop as much transaction data, identifying information, suspicious activity reporting as possible, and use it to stop the bad guys. They've been doing it for crypto, too - since at least 2013!

5/ Let's dive in. First up: Wallets. Noncustodial wallets are not money transmitters in the US. They are unregulated. Nice to see FinCEN confirm what most commentators have been thinking for a long time.

6/ This is an historic day for @blockchain, @Ledger @BRDHQ , @EdgeWallet and all the rest. I'll confess to personal delight here, too. Advocating for the protection of noncustodial, open-source software publishers has been a personal goal of mine for the better part of a decade

7/ Why? Because, even if many crypto users rely on their availability, they do not *control* funds any more than an operating system or a mobile device does. I join the chorus of commentators commending FinCEN for finally committing this approach to writing.

8/ Today is also historic because I will break with tradition and link directly to the guidance itself prior to requiring your attention to my self-important tweet storming. Here it is: https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20CVC%20Guidance%20FINAL.pdf …

9/ Next up: Exchanges. Did you know that, whenever you make a funds transfer, your bank has to send *your* personally identifying information along to any recipient financial institution?

10/ @jony_levin can keep me honest here, but apparently this is mostly for backup purposes, to ensure that FinCEN can get its data even if one of the banks goes bust. FinCEN says crypto exchanges have to do this too... but, like, how?

11/ A crypto exchange user requesting a withdrawal just supplies an address. How is the exchange supposed to know whether it is for another FI or just a noncustodial wallet? You'll be shocked, I'm sure, to hear that our industry has been fighting about this since 2013.

12/ There is no real way to implement this without an interstitial (mandatory?) layer over the core network, just so that FIs can message each other. Sounds a bit like SWIFT eh? Anyway, that's a nightmare.

13/ On to crypto ATMS, or "BTMs" or crypto vending machines. FinCEN says those are money transmitters. Cool. I think we all mostly assumed that anyway.

14/ For clarity: They're money transmitters (MTs) regardless of whether they sell from their own inventory or they just transmit user funds to an exchange

15/ Now on to FinCEN's exhaustive analysis on Lightning Nodes. This is a really good one so buckle up.

16/ Heh okay FinCEN didn't say anything at all about lightning nodes. Nor are they going to. It's just silly. Honestly, people, stop with this stuff.

17/ You know what the guidance does talk about, though? Decentralized Exchanges ~DEX~ Yes, The wave of the future. The crypto thing that is going to change all the other crypto things And I'm only a little bit shocked that they got it totally right.

18/ DEXes that just post bids and asks without settling the funds - they are unregulated. They don't actually "control" any funds. DEXes that settle trades, though, they both "accept" and "transmit" crypto, making them just as regulated as any other exchange.

19/ I'll note that this outcome is unique to FinCEN, cryptocurency and money transmission. If the DEX is listing a something other than mere virtual currency (like, say, a tokenized security), securities laws kick in too.

20/ The securities laws are much broader and don't require "control". SEC said as much in a recent enforcement action that I hereby direct you, CT people, to immediately link to in a comment to this tweet.

21/ We pause here at 21, this hallowed number, to commemorate the giant on whose shoulders we all stand.

22/ But we continue because satoshi ain't the boss of me.

23/ We're mostly continuing into gross and weird territory though: ICOs, and dApps. FinCEN says ICO sellers could possibly maybe under some circumstances be MTs in the US, but only if they actually transmit money.

24/ FinCEN mostly speaks in jargon here so I'll boil it down: software development? not regulated. *deploying* software? still not regulated deploying software that transmits money? Very much regulated Not super helpful but as good as their guidance gets.

25/ What about ICOs? This is a tricky one. I'll be grateful if CT can help me to digest it but here goes:

26/ Simply premining and then publicly selling the premined coins (in an ICO or otherwise) *is not* money transmission. Pre-selling coins to a select group of individuals (whether or not you deliver in the future) *is* money transmission *unless you're selling a security*. Why?

26/ According to FinCEN, just premining and selling openly isn't really "acceptance and transmission" Premining and selling to a small group while the developer still controls the network means the developer is really an "issuer" and therefore an MT.

27/ Prelling a security, though, like SAFTS and SAFT+E, etc. is investment activity falling under the securities laws, not the MT laws. We talk about this in the SAFT project whitepaper. Good to see it from FinCEN, too.

28/ OK just a couple more and then we'll call it quits: Cloud miners: Not regulated unless they host a wallet Crypto Payment processors: Totes regulated almost always Tumblers & Mixers: If custodial, def regulated.

29/ What about multisig? If you have control over sufficient keys to spend, regulated. If you have sufficient keys to prevent spending, not regulated (wait wut why not?)

30/ There's much, much more, but I'm le tired, so I'll just leave it at this. I hope this thread is helpful. All reg guidance is imperfect but I think FinCEN did an admirable job of learning about a weird, complex topic and giving practical, actionable advice. Cheers!
 



Thomas Lee @fundstrat

In a period where: —political tensions escalate between US and China, —global equity markets fall sharply —VIX largest spike in many months —global yield curves flatten/invert #bitcoin has RISEN and >$6,000 Crypto showing its value as an uncorrelated asset.
 



Katherine Wu @katherineykwu

Instead of a tweet storm about the FinCEN crypto guidance, I downloaded and annotated the entire thing. For those who actually would like to read the document, but may need some help in figuring out exactly which sentences/ sections matter. DL here :) katherinewu.me/writings/fince…
 


Katherine Wu‏ @katherineykwu 

Newest speech from the SEC's @HesterPeirce-- opens with "I was very wrong, not about whether the SEC would stifle the [crypto] industry’s growth—it HAS—but in how it would do it". Brings up some of her thoughts around the SEC's actions + guidance to date. https://www.sec.gov/news/speech/peirce-how-we-howey-050919 …

In regards to the SEC's digital asset framework: "While Howey has four factors to consider, the framework lists 38 separate considerations, many of which include several sub-points...contribute to the feeling that navigating the securities laws in this area is perilous business.

Re: the no-action letter (tokenized airline miles): "If these tokens were securities, it would be hard to distinguish them from any medium of stored value. Is a Starbucks card a security? If we are going that far, I can only imagine what name the barista will write on my coffee"

Pierce also echos the frustrations around the open questions for broker-dealers, trading platforms, Reg A issuers, investment advisers and funds: "The SEC's silence is likely to simply push this innovation & any attendant economic growth into other jurisdictions..."

Mic-drop ending:  "The U.S. securities markets have historically been the envy of the world; I do not want heel-dragging by the SEC in crypto to mar that well-deserved reputation."



Emin Gün Sirer‏ @el33th4xor 

The SEC issued new guidance for money transmitters using cryptocurrencies. It then deleted the web page. Here's the document, it has far-reaching implications: https://www.systems.cs.cornell.edu/docs/fincen-cvc-guidance-final.pdf …

TL;DR: To my non-lawyer eyes, this looks like mostly bad news. Running a Lightning node requires a money transmission license. Oddly, providers of anonymity services are exempt. DEX operators (but not necessarily developers) are money transmitters.

Let me add a few other random thoughts.

First of all, this document is not a case of "the man" going after crypto, the tech. It is not a case of heavy-handed legislation. It is not a mindless attempt at a ban, of the kind that we have seen in other countries. It's a nuanced document, written by subject matter experts.

It is remarkable what the document does not do: it does not ban the tech. It does not ban any aspect of the technology that actually makes FINCEN's job harder. It leaves anonymity providers exempt, for instance.

It also does not burden or exempt anyone based on their status or title, like developer, wallet provider, etc. Instead, it has a very functional view: they are attempting to capture behaviors where someone has possession of value and helps transfer it.

They provide clarity for multisig wallets, and they seem to exempt multisig wallet providers. This is good. They believe hosted wallets qualify as MSBs, which is not new.

They exempt developers of DEXs and Dapps, insofar as they remain only developers. But they have an "operator" classification that does qualify a DEX operator as an MSB. If you're on the money transfer path and benefiting directly from the value exchange at the DEX, you're an MSB.

To my reading, the document qualifies every LN operator as an MSB. Given how similar LN is to hawala networks, and given the role hawala networks played in financing terrorism pre-9/11, this is not surprising, but it's at odds with the community's expectations.

There will be a lot of uproar over this issue, and many legal minds will look into the nuanced language in the document. Recall that this is a deleted document, that I'm not a lawyer, and therefore this is just a fun exercise with no binding power at the moment.

They also explicitly mention that mining payouts are exempt from MSB status, because that's part and parcel of a "hosted mining" service, but any additional services (e.g. token swaps where dirty coins are exchanged for fresh ones, come to mind) are not.

The bit about hosted mining still leaves a bit of a loophole: hosted mining can still be used for money laundering. Regardless, I think everyone will appreciate the clarity. And the document circumscribes the services that can be provided by miners.


IEO Statistics

 
Project Status Launchpad Start IEO Price Current Price 24h Change
DUO Network Ended $941k BitMax Launchpad 27 Apr, 2019 $ 0.15 $ 0.356420 -30.07%
Fetch.AI Ended $6M Binance Launchpad 25 Feb, 2019 $ 0.0867 $ 0.098402 -7.29%
ThunderCore Upcoming Huobi Prime 09 May, 2019 $0.015 $ 0.029191 -8.52%
Celer Network Ended $3.9M Binance Launchpad 19 Mar, 2019 $ 0.0067 $ 0.007621 -0.83%
MultiVAC Ended $16.2M Kucoin Spotlight 03 Apr, 2019 $ 0.006 $ 0.006107 -2.15%
Matic Network Ended $5M Binance Launchpad 24 Apr, 2019 $ 0.00263 $ 0.003473 7.88%
Ocean Protocol Ended $6M Bittrex International 30 Apr, 2019 $ 0.12 $ 0.002089 -4.80%
BitTorrent Token Ended $7.1M Binance Launchpad 28 Jan, 2019 $ 0.00012 $ 0.000639 -1.02%
For inquiries, our mailing address is: contact@gsgasset.com

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.

This update is provided for information purposes only and does not bind GSG Asset Management or any of its affiliates in any way. It is not, and is not intended to be, a/an: (1) “research report”, “investment research” or “independent research” as may be defined in applicable laws and regulations worldwide; (2) offer to sell, a solicitation of an offer to buy, or a recommendation for any digital asset by GSG Asset Management or any third party; or (3) official confirmation or official valuation of any transaction or asset mentioned herein. To the extent that any of the content published in this update may be deemed to be investment advice or recommendation in connection with a particular digital asset, such information is impersonal and not tailored to the investment needs of any specific person. Any pricing information is indicative only, and does not reflect a level where GSG Asset Management is prepared to execute a trade. You understand that an investment in any digital asset is subject to a number of risks, and that discussions of any digital assets in this update will not contain an exhaustive list or description of the relevant risk factors. GSG Asset Management is not an advisor, and nothing in this update should be construed as investment, tax, legal, accounting, regulatory or other advice, or as creating a fiduciary relationship. You alone are solely responsible for determining whether any investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. You should consult an attorney or tax professional regarding your specific legal or tax situation. All market prices, data, and other information (including that which may be derived from third party sources believed to be reliable) are not warranted as to completeness or accuracy, and are subject to change without notice. All content in the update is presented only as of the date published or indicated, and may be superseded by subsequent market events or for other reasons. GSG Asset Management disclaims any responsibility or liability to the fullest extent permitted by applicable law, whether in contract, tort (without limitation, negligence), equity, or otherwise, for any loss or damage arising from any reliance on or use of this update in any way.






This email was sent to *|EMAIL|*
why did I get this?    unsubscribe from this list    update subscription preferences
*|LIST:ADDRESSLINE|*