Blockchain Bites: Plus Token Ponzi Popped, Cardano Forked and tZERO Cut

Cardano hard forked to its proof-of-stake network, token platform tZERO cut staff and compensation, and a derivatives exchange is looking to list on Nasdaq.

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Hello, Shelley
Cardano is now running a proof-of-stake consensus mechanism. Announced Wednesday, the open-source smart-contract platform designed to challenge Ethereum’s lead position, hard-forked from the centralized Byron network into the decentralized Shelley network. IOHK, the lead design firm, said “hundreds” of assets are expected to run on the blockchain in a year’s time. The PoS delegation process lets users holding Cardano’s native token (ADA) commit their tokens to a pool for a share of rewards. A number of additional upgrades and improvements are expected in the coming months, including a new governance model, Project Catalyst.

Ponzi Popped
Chinese police have arrested all 27 primary suspects thought to be responsible for running the $5.7 billion Plus Token Ponzi scheme. Led by the Ministry of Public Security, China’s top police force agency, the investigators has also arrested another 82 core members of the scheme in what looks like the first crackdown on an international, crypto Ponzi. The scheme allegedly scammed two million people by using cryptocurrencies including bitcoin as a funding channel.

Public Backdoor
Newly launched derivatives platform EQUOS.io is set to become the first publicly traded crypto exchange in the U.S. through a “backdoor listing” on Nasdaq later this year. Its operator, Hong Kong-based Diginex, announced Thursday it is combining EQUOS.io with the Nasdaq-listed Singapore’s 8i Enterprises Acquisition Corp – a special-purpose acquisition company. SPACs are shell companies that use funds from their IPOs to acquire target companies, bringing them public through the “backdoor,” a process that is faster and cheaper than traditional listings, according to Diginex CEO Richard Byworth.

Cuts & Capital
Security token platform tZERO has cut staff and salaries as it eyes another capital raise. CEO Saum Noursalehi said tZERO had “significantly reduced” its cash burn rate 45% year on year by cutting legal costs and staff and trimming executive salaries in exchange for company equity. A majority-owned subsidiary of Overstock, tZERO raised $134 million in a 2018 ICO – short of its $250 million target – and secured $5 million investment from Chinese fund GoldenSands Capital in April. 

Bit by Bit
Binance launched a new Australian fiat-to-crypto exchange platform Wednesday that CryptoX has discovered is run by the founders of a company providing crypto payment services for the local tourist industry. A spokesperson said Binance Australia was a separate entity from the main exchange group, and operated by InvestbyBit, a Queensland-based private company and a licensed Australian digital currency exchange. Through InvestbyBit, Binance Australia is registered with AUSTRAC, one of the country’s primary financial enforcement agencies, the spokesperson added. As the name suggests, InvestbyBit has close ties to TravelbyBit, a crypto payment provider for the tourist industry in which Binance invested $2.5 million in late 2018.

Wednesday, the House Judiciary Committee held an investigation into anti-competitive practices at Amazon, Apple, Facebook and Google. 

Documents and testimony gave a window into hostile business practices and a business environment where these four U.S.-based firms could crush, buy or steal from startups. This isn’t news. In 2011, it was revealed Google was buying one company a week. It’s market consolidation, not meant to help consumers but an attempt to maintain corporate control over data flows and innovation. 

Many, like The Verge’s Casey Newton, criticized the hearing for going widely off-topic, including tangents into conspiracy theories, and generally avoiding the topic of tech innovation. But he still walked away with the sense the federal government is ready to pursue meaningful antitrust action. 

“Members of the subcommittee have largely come to believe, as I do, that tech companies have grown too powerful and are in need of regulation,” he wrote. 

It’s a sentiment that’s percolating through the small subset of tech called crypto. Coin Center’s Jerry Brito tweeted midway through the hearing, “Repeat after me: Antitrust law exists to protect consumers, not competitors.”

While Elizabeth Renieris, founder of Hackylawer, shot off a succinct Shoshana Zuboff quote: “Surveillance capitalism unilaterally claims human experience as free raw material for translation into behavioral data.” 

Crypto got wise to Big Tech’s chokehold over the internet early. Instead of waiting for government-led action, technologists and developers started building ways to exit the system. 

While these systems are still niche, they offer an alternative to both the public and “private governments” that Amazon, Apple, Facebook and Google have become. 

Overbought or Overwrought? 
With bitcoin rising to its highest level in 11 months this week, some investors are beginning to worry that the cryptocurrency is overbought and may be due for notable price drop. Bitcoin’s price rose to $11,319 on Monday, the highest level since August 2019, according to CryptoX’s Bitcoin Price Index. The sudden rally has pushed the 14-day relative strength index (RSI) above 80.00, a number indicating the bullish move may be overstretched. Asim Ahmad, co-chief investment officer at London-based Eterna Capital, said that an above-70 RSI does not necessarily imply an impending major price slide. 

In the Green
About 93% of all bitcoin address balances were estimated to be “in profit,” according to Glassnode, when bitcoin traded above $11,000 Wednesday. The metric measures the on-paper profits of wallet balances. More than 90% of bitcoin addresses were last in profit through July and August 2019 when bitcoin traded around $11,500, a local top for the leading cryptocurrency. The 11-month high for in-profit addresses came amid bitcoin’s rally to $11,400 and follows steady long-term accumulation by investors at lower prices, with fewer than 40% of all bitcoins having been moved in the past year. 

Frozen Fed Moves Zero Degrees
The Federal Reserve said Wednesday it would hold benchmark U.S. interest rates close to zero (in range between 0% and 0.25%) and continue buying Treasury bonds to support the coronavirus-devastated economy. The “path of the economy will depend significantly on the course of the virus,” it said. Not said at the press conference: Another $5 billion of freshly created money was injected into financial markets, based on the $80 billion of bond purchases that the Fed is conducting every month to keep financial markets functioning smoothly as the fast-spreading coronavirus devastates the global economy, according to First Mover. Cue the inflationary hedge and brr memes. 

Year Zero: From Those Who Were There – Thursday, July 30, 4 p.m. ET

Speakers: Anthony Di Iorio, Anthony D’Onofrio, Adam Levine, Camila Russo, Ken Seiff

Getting the “world computer” operational was no easy task. Hear about the 24/7 coding, the infighting and the instant millions minted in that process. Camila Russo, author of the new book “The Infinite Machine,” digs into Ethereum’s highs and lows with the programmers, entrepreneurs and investors who got in on the ground floor.

Watch today’s CryptoX Live session at 4 p.m. ET and sign up for the Ethereum at Five limited-run newsletter, published every morning until July 31.

$500M in Fees
A new study from Bitcoin startup Veriphi finds companies and users sending bitcoin transactions could have saved more than $500 million in fees if everyone had used SegWit and a technique called transaction batching. SegWit, a 2017 update to Bitcoin, allows for more space for transactions per block, and transaction batching enables the sending of multiple transactions at once to cut down on paying for each individual transaction. The average fee costs about $3 per transaction, but increases with demand and transaction volume. 

Autonomous Aave
Aave is going fully autonomous – transferring ownership of the money protocol to a “genesis governance” built and approved by token holders. Formerly EthLend, the platform raised a $16.2 million initial coin offering in 2017, and launched as a peer-to-peer lending protocol. It has since renamed and switched to a pooled protocol that allows for more dynamic asset listings, network liquidity and variable interest rates. Launched January 2020, Aave was among the first to include the novel DeFi product flash loans, and now has plans to incorporate liquidity mining. 

Lightning Round
Richard Myers, a decentralized applications engineer at goTenna’s Global Mesh Labs initiative, thinks as long as people are paying for internet connectivity in fiat, online censorship is inevitable. “As long as telecommunications tools are being paid for in fiat, they will never be free from governmental or corporate repression. To be truly censorship resistant, internet publishers must be able to accept anonymous payments from their subscribers and advertisers,” he said. 

DeFi Disruptor
Chainlink co-founder Sergey Nazarov appeared on the latest episode of The Breakdown to discuss his life’s work: disrupting traditional finance. “Imagine a world without counterparty risk…” he said.