Crypto looks past latest exchange hack, Coinbase pushes back on ‘own trading’ claims

JapanJapan has embraced crypto but keeping investors safe is proving a challenge

updated 20 Sept 2018 UTC+1: 13:00  Japan National Police Agency says total of 60.503 billion yen ($540 million) stolen from country’s exchanges in first six months of year, reports Asahi Shimbun.

It wouldn’t be crypto if there weren’t crypto exchange hacks, and that’s a problem, obviously – even more so when the hacks happens in Japan, where regulations and licensing are most advanced.

Hacked exchange Zaif is licensed under the government scheme. It was hit for $59 million (4.5 billion yen) on 14 September.

The computer break-in wasn’t discovered until two days later when unusual activity was discovered on a server. 5,966 BTC was stolen along with lesser amounts of MonaCoin and Bitcoin Cash.

Bitcoin initially fell on the news. Last night from around 7.00 pm (UTC+1) it lost $150 in a drop to $6,208  but bounced back, trading at $6,445 by 9 pm.

Market brushes off latest crypto hack

The market’s robust reaction to the latest hack out of Japan is encouraging; market participants have seen it all before and are muting their response accordingly. Instead of interpreting the hack of one exchange as a sign of systemic failure, investors are seeing them for what they are – examples of poor business practices or bad managements in an industry with little oversight – depending on the size of the venue.

Nevertheless, there are widespread problem with exchange security – one which the likes of Coinbase seem to handle a lot better than Zaif or the much bigger Coincheck, hacked in January, with $530 worth (at the time) of NEM tokens (XEM) stolen.

The Zaif exchange, the 100th-placed trading venue by volume, is owned by Fiscal Digital Asset Group and operated by Tech Bureau. FiscalDigital has promised to reimburse customers for loses.

In the wider market today, FunFair (FUN) $0.0186 is 22% higher after securing a Curaçao gambling licence and the subsequent successful launch of CasinoFair, which runs on the FunFair protocol.

And Chainlink (LINK), the vendor of blockchain-agnostic complex  smart contracts has put on 19% at $0.395.

Ripple’s XRP has held on to its gains of 35% seen over the past two days.

Crypto market cap is clinging to $200 billion.

Coinbase and Kraken spar with New York regulator

The fallout from the New York Office of the Attorney General (NYOAG) report on crypto exchanges continues. The report in part reads: “Coinbase disclosed that almost twenty percent of executed volume on its platform was attributable to its own trading.” Coinbase has today rebutted those claims. US financial regulators have become noticeably more active this year in policing action at the ICO and it would seem the exchange level.

New York launched the Virtual Markets Integrity Initiative in April. It requested that a total 13 exchanges provide information on business processes, controls,, record keeping and the measures taken to guard against market manipulation and to protect client funds. Binance, Kraken, Gate.io and Huobi have all refused to cooperate with the NYOAG’s investigation.

Mike Lempres, Coinbase chief policy officer, wrote in a blog that all trading  was at client direction: “When Coinbase executes these trades, it does so on behalf of Coinbase Consumer customers, not itself.” He also stated that “Coinbase does not trade for the benefit of the company on a proprietary basis.”

Kraken, which has developed, wrongly or rightly, a reputation for recalcitrance in its less than cooperative attitude towards regulators, was dismissive of the NYOAG’s concerns, which may come back to bite them

Kraken boss Jesse Powell said at the time of the NYOAG announcement of the initiative that it would not be taking part: “I realized that we made the wise decision to get the hell out of New York three years ago and that we can dodge this bullet.”

The New York people are not happy, as this statement shows:

“The OAG could not review the practices and procedures of non-participating platforms (Binance, Gate.io, Huobi, and Kraken) concerning manipulative or abusive trading. However, the Kraken platform’s public response is alarming. In announcing the company’s decision not to participate in the Initiative, Kraken declared that market manipulation ‘doesn’t matter to most crypto traders,’ even while admitting that ‘scams are rampant” in the industry.’

Coinbase is on a hiring spree for staff in New York as it seeks to position itself to address the market it sees ahead in providing crypto services to institutions.

 

 

 

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