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<img class="wp-image-5656 alignright" src="https://theblockchainmonitor.bakerhostetlerblogs.com/wp-content/uploads/sites/24/2019/07/network-world-GettyImages-1018336186_1200x630.jpg" alt="" width="438" height="230" />In this issue:
• <a href="#Ethereum">Ethereum Fork Implemented, Exchanges Expand Services, New Bitcoin Network Data</a>
• <a href="#Enterprise">Enterprise Developments in Sneakers, Browsers, Copyrights and Private-Public Blockchain Integration</a>
• <a href="#EU">EU and NY Consider New Crypto Regulations, AML Report Published and Tools Debut</a>
• <a href="#Enforcement">Enforcement Actions Target ICO Fraud and Ponzi Schemes, Assets Retrieved From Hacked Exchange</a>
<a id="Ethereum"></a>Ethereum Fork Implemented, Exchanges Expand Services, New Bitcoin Network Data

By: <a href="https://www.bakerlaw.com/JoannaFWasick">Joanna F. Wasick</a>

The Ethereum network’s Istanbul hard fork went forward late last week with the support of node operators, miners and cryptocurrency exchanges. This eighth upgrade of the Ethereum protocol aims to make improvements such as faster network speed and preventing the spamming of blocks. So far, no major negative events have been reported. Also last week, the Bitcoin network transferred $8.9 billion worth of bitcoin within one hour – the highest hourly volume move in Bitcoin history. The spike was reportedly caused by the Bittrex exchange, which conducted a series of 21 equally valued transactions as part of its scheduled maintenance.

Kraken, a U.S.-based cryptocurrency exchange, announced last week that, as part of a collaboration with an independent Lichtenstein-based bank, it will now support Swiss franc trading. This is the sixth fiat currency that Kraken will trade, the others being the United States dollar, Canadian dollar, Euro, British pound sterling and Japanese yen. BitPay, a major blockchain payment service, announced this week the rollout of stablecoin payments for merchants and consumers around the globe. The company will now support payment acceptance and settlement in three U.S. dollar-pegged stablecoins: Circle’s USD Coin, the Gemini Dollar and Paxos Standard Token. BitPay will also continue to accept bitcoin, bitcoin cash and ether.

Announced late last week, cryptocurrency exchange Binance is partnering with peer-to-peer cryptocurrency trading platform Paxful to enable new fiat payment options through Paxful’s Virtual Bitcoin Kiosk. According to the announcement, the kiosk will enable Paxful to facilitate bitcoin purchases with fiat payments in more than 167 currencies. Binance also recently announced a collaboration with Settle Network, a Latin American digital asset network, to launch “Latamex,” a new platform allowing Latin American users to directly purchase cryptocurrency. The new platform will first launch in Argentina and Brazil, with 13 other Latin American countries to follow.

Finally, a recent report indicates that bitcoin miners in China control two thirds of the network’s overall processing power. Chinese miners reportedly now have 66% of the global hashrate – the measure of network power that dictates the ability of computers on the Bitcoin network to mine new bitcoin.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://cointelegraph.com/news/ethereum-istanbul-hard-fork-get-support-from-major-crypto-exchanges">Ethereum Istanbul Hard Fork Get Support From Major Crypto Exchanges</a></li>
 	<li><a href="https://cointelegraph.com/news/almost-9-billion-of-bitcoin-moved-on-chain-in-1-hour-record">Almost $9 Billion of Bitcoin Moved On-Chain in 1 Hour: Record</a></li>
 	<li><a href="https://blog.kraken.com/post/3265/kraken-now-supports-the-swiss-franc-chf/">Kraken now supports the Swiss franc (CHF)!</a></li>
 	<li><a href="https://www.businesswire.com/news/home/20191210005662/en/BitPay-Launches-Worldwide-Stablecoin-Payments">BitPay Launches Worldwide Stablecoin Payments</a></li>
 	<li><a href="https://www.coindesk.com/binance-adds-new-fiat-currency-options-through-integration-with-p2p-exchange-paxful">Binance Adds New Fiat Payment Options Through Integration With P2P Exchange Paxful</a></li>
 	<li><a href="https://cointelegraph.com/news/binance-cryptocurrency-exchange-launches-latin-american-fiat-gateway-1">Binance Cryptocurrency Exchange Launches Latin American Fiat Gateway</a></li>
 	<li><a href="https://www.reuters.com/article/us-crypto-currencies-mining/chinas-bitcoin-miners-scoop-up-greater-production-power-research-idUSKBN1YF1PB">China's bitcoin miners scoop up greater production power - research</a></li>
</ul>
<a id="Enterprise"></a>Enterprise Developments in Sneakers, Browsers, Copyrights and Private-Public Blockchain Integration

By: <a href="https://www.bakerlaw.com/MarcDPowers">Marc D. Powers</a>

A leading American sneaker and footwear company has patented a system for tokenizing shoes on the Ethereum blockchain. The patent describes the creation of a non-fungible token on the blockchain, representative of a particular kind of shoe with its own unique characteristics, and of identifiers, which are “unlocked” upon the sale of the physical sneaker to a customer. According to the patent, the digital shoe and the cryptographic token collectively represent a “CryptoKick.”

Bitcoin mining giant Bitfury, out of Amsterdam, recently announced the launch of its latest enterprise blockchain software development, Exonum Enterprise. This continues the expansion of the company’s move away from its core business, which it began in 2011 selling mining hardware in exchange for cryptocurrencies. This product is claimed to be the first private enterprise blockchain that “anchors” data to the Bitcoin blockchain.

Brave announced last week that it had 10 million active monthly users since the release of the Brave 1.0 platform on Nov. 13. This reportedly amounts to an almost 20% increase in less than a month of 1.7 million users for the browser, which combines privacy with a blockchain-based digital advertising platform and is reported to have three to six times faster browsing capability. According to reports, Brave’s monthly active users have doubled in the past year.

The Italian Society of Authors and Publishers (SIAI) has reportedly teamed up with Algorand to develop a new ecosystem for copyright management, based on Algorand’s recently launched blockchain platform. Algorand uses a Proof of Stake protocol that it says guarantees decentralization, scalability and security, which SIAI believes makes it particularly suitable for copyright management of its members’ copyrighted materials.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://cointelegraph.com/news/nike-patents-a-system-for-tokenizing-shoes-on-ethereums-blockchain">Nike Patents a System for Tokenizing Shoes on Ethereum’s Blockchain</a></li>
 	<li><a href="https://www-forbes-com.cdn.ampproject.org/c/s/www.forbes.com/sites/michaeldelcastillo/2019/12/05/bitfury-launches-first-enterprise-blockchain-secured-by-bitcoin/amp/">Bitfury Launches First Enterprise Blockchain Secured By Bitcoin</a></li>
 	<li><a href="https://brave.com/brave-passes-10m-mau/">Brave Passes 10 Million Monthly Active Users, and Sees 19% Growth since 1.0 Launch</a></li>
 	<li><a href="https://cointelegraph.com/news/italian-copyright-authority-and-algorand-develop-blockchain-ecosystem-for-copyright-management">Italian Copyright Authority and Algorand Develop Blockchain Ecosystem for Copyright Management</a></li>
</ul>
<a id="EU"></a>EU and NY Consider New Crypto Regulations, AML Report Published and Tools Debut

By: <a href="https://www.bakerlaw.com/SimoneOOtenaike">Simone O. Otenaike</a>

Last week the European Council and the Commission adopted a statement regarding stablecoins. According to the statement, the lack of legal clarity regarding stablecoins makes it difficult to determine whether and how the existing EU regulatory framework applies. The Council and the Commission also noted that stablecoin arrangements cannot launch in the European Union until regulatory and oversight frameworks are developed. Meanwhile, the New York State Department of Financial Services (DFS) announced plans to review and update their virtual currency regulations, which were issued back in 2015. DFS is seeking comments from the public regarding two proposed coin adoption or listing options that the agency reportedly plans to make available to current DFS license holders.

CipherTrace recently published its 2019 Q3 cryptocurrency anti-money laundering report. According to the report, roughly 60% of the top 120 cryptocurrency exchanges have insufficient know-your-customer practices. The report also noted that Q3 of 2019 saw a significant reduction in total cryptocurrency crimes from previous quarters, but the total dollar amount attributed to theft and fraud in 2019 is still relatively high at $4 billion.

Elliptic, a global leader in crypto-asset risk management solutions for businesses and financial institutions, recently launched Elliptic Discovery. Elliptic Discovery offers a broad range of risk indicators for financial institutions to identify and evaluate the risk posed by the flow of funds into and out of crypto-assets on exchanges. Elliptic Discovery seeks to allow banks to work more closely with certain cryptocurrency businesses based on an evidence-based risk assessment.

More than 80 Japanese banks have shown recent interest in a leading U.S.-based financial institution’s Interbank Information Network, which leverages blockchain to help combat money laundering. If these banks join, Japan will reportedly have the largest number of banks in the worldwide network.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.consilium.europa.eu/en/press/press-releases/2019/12/05/joint-statement-by-the-council-and-the-commission-on-stablecoins/">Joint statement by the Council and the Commission on "stablecoins"</a></li>
 	<li><a href="https://www.dfs.ny.gov/apps_and_licensing/virtual_currency_businesses/pr_guidance_regarding_listing_of_vc">NYDFS Proposed Guidance Regarding Adoption or Listing of Virtual Currencies</a></li>
 	<li><a href="https://ciphertrace.com/q3-2019-cryptocurrency-anti-money-laundering-report/">CipherTrace Q3 2019 Cryptocurrency Anti-Money Laundering Report</a></li>
 	<li><a href="https://www.prnewswire.com/news-releases/elliptic-launches-elliptic-discovery-enabling-banks-to-identify-and-assess-their-exposure-to-crypto-assets-and-work-more-closely-with-crypto-exchanges-300972992.html?tc=eml_cleartime">Elliptic Launches Elliptic Discovery, Enabling Banks to Identify and Assess their Exposure to Crypto-Assets, and Work More Closely with Crypto Exchanges</a></li>
 	<li><a href="https://www.bloomberg.com/news/articles/2019-12-09/money-laundering-battle-drives-japan-banks-to-jpmorgan-network">Money Laundering Battle Drives Japan Banks to JPMorgan’s Network</a></li>
</ul>
<a id="Enforcement"></a>Enforcement Actions Target ICO Fraud and Ponzi Schemes, Assets Retrieved From Hacked Exchange

By: <a href="https://www.bakerlaw.com/VeronicaReynolds">Veronica Reynolds</a>

Last week, operators of a Romanian criminal enterprise named the “Bayrob Group” were convicted of cybertheft crimes resulting in $4 million in losses to victims. The unlawful operation began in 2007 and involved viral distribution of malicious software via phishing emails. The malware harvested personal data and diverted processing power for cryptocurrency mining.

This week, U.S. law enforcement arrested four men for wire fraud and conspiracy to offer and sell unregistered securities in a purported cryptocurrency mining pool operation. Victims were lured into the investment scheme through promises of high returns from participation and investment in the scheme. No returns materialized, and the fraudsters swindled would-be investors out of more than $722 million.

Also this week, the Securities and Exchange Commission (SEC) charged a digital-asset entrepreneur and his company with defrauding investors through an initial coin offering (ICO) that solicited more than $42 million from investors in violation of the securities laws. The company, Shopin, allegedly failed to create the retail blockchain platform it hocked to investors. According to the SEC’s complaint, Shopin fraudulently claimed partnerships with major retailers and a prominent cryptocurrency entrepreneur to make its business model more attractive to the public while the company’s founder misappropriated at least $500,000 for his own use.

Overseas, Ugandan Police cracked down on cryptocurrency-related Ponzi schemes this week, with the arrest of one of the directors of a sham cryptocurrency company. The Ugandan government believes the company has defrauded victims out of at least $2.7 million. Meanwhile, Denmark’s tax agency has reportedly begun sending letters to cryptocurrency investors requiring them to reply to a detailed questionnaire that seeks to understand profits and losses from cryptocurrency investments for fiscal years 2016 to 2018. This follows authorization by the country’s Tax Council earlier this year to investigate trades across the nation’s domestic cryptocurrency exchanges.

And finally, some good news for victims of the Cryptopia hack – the New Zealand exchange that in January 2019 was “hacked to death” – who received a breakdown of retrieved assets from the accounting firm in charge of liquidating the assets of the bankrupt exchange. However, distribution of assets to victim investors may be a long time coming, because the exchange pooled all investments on the platform into general wallets, making it difficult to find out how much of which assets customers held on Cryptopia.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.sec.gov/news/press-release/2019-259">SEC Charges Founder, Digital-Asset Issuer With Fraudulent ICO</a></li>
 	<li><a href="https://www.justice.gov/usao-nj/pr/three-men-arrested-722-million-cryptocurrency-fraud-scheme">Three Men Arrested in $722 Million Cryptocurrency Fraud Scheme</a></li>
 	<li><a href="https://www.justice.gov/usao-ndoh/pr/two-members-romanian-cybercriminal-enterprise-bayrob-group-sentenced-21-counts-relating">TWO MEMBERS OF THE ROMANIAN CYBERCRIMINAL ENTERPRISE BAYROB GROUP SENTENCED ON 21 COUNTS RELATING TO INFECTING OVER 400,000 VICTIM COMPUTERS WITH MALWARE AND STEALING AT LEAST $4 MILLION</a></li>
 	<li><a href="https://cointelegraph.com/news/ugandan-police-hold-director-of-alleged-27m-crypto-ponzi-scheme">Ugandan Police Hold Director of Alleged $2.7M Crypto Ponzi Scheme</a></li>
 	<li><a href="https://www.coindesk.com/defunct-cryptopias-liquidator-claws-back-7-2m-but-identifying-crypo-ownership-a-mammoth-task">Cryptopia’s Liquidator Claws Back $7.2M, But Identifying Crypto Ownership a ‘Mammoth Task’</a></li>
 	<li><a href="https://cointelegraph.com/news/report-denmarks-tax-agency-is-sending-tax-compliance-letters-to-crypto-users">Report: Denmark’s Tax Agency Is Sending Tax Compliance Letters to Crypto Users</a></li>
</ul>

Ethereum Fork Successful, Solutions Target Sneakers and Browsers, EU and NY Consider Regulations, Enforcement Actions Continue