Trump launches new crypto platform with scant detail

NEW YORK, United States - Former US president Donald Trump along with his sons and entrepreneurs late Monday launched a cryptocurrency platform but provided few details.

Little was revealed about the Trump family crypto project during a two-hour online presentation other than an offer to let people buy digital "tokens" giving them a vote in platform decisions. The event went ahead as planned despite an apparent assassination attempt against Trump on Sunday at his golf club in West Palm Beach, Florida.

World Liberty Financial intends to offer services based on so-called decentralized finance, a mechanism that eliminates the need for an intermediary such as a bank to carry out transactions with a third party, the politics-laced discussion indicated.

The former president's son Donald Trump Jr. touted this as "the start of a financial revolution," during a session streamed on X, formerly Twitter. Zachary Folkman and Chase Herro, the linchpins of the project and established cryptocurrency entrepreneurs, said the platform would primarily use "stablecoins", which are backed by a traditional currency, most often the dollar.

As a result, they are free from the sometimes brutal fluctuations experienced by digital currencies untethered to real-world money. World Liberty Financial wants to attract the masses to cryptocurrencies, creating a platform easily accessible to people, Folkman said.

Project leaders said they would sell tokens that give owners the right to take part in governance of the platform, with 63 percent of them offered to the public, 20 percent going to the founding team and the rest set aside as rewards for users.

No timetable for the project was disclosed.

During his presidency Trump referred to cryptocurrencies as a scam, but has since radically changed his position, presenting himself as a "pro-bitcoin president" if elected in November. In so doing, he is standing in opposition to the Biden administration, which is seen as a proponent of regulating the sector.

Agence France-Presse

Fraud trial of disgraced crypto star Sam Bankman-Fried begins

The trial of Sam Bankman-Fried, the former CEO of one of the cryptocurrency industry's biggest exchanges, begins on Tuesday to determine whether he committed massive fraud against more than a million clients.

The 31-year-old -- once one of the most respected figures in crypto -- now faces decades in prison and could see his name alongside Bernie Madoff and Elizabeth Holmes as one of the era's most prominent fraudsters.

The first day of the trial will be devoted to jury selection for a case that is set to last about six weeks.

In just a few years, the curly-haired Massachusetts Institute of Technology graduate turned his FTX platform into the world's second biggest crypto exchange, making him the tech world's latest billionaire wunderkind feted from Wall Street to Silicon Valley.

FTX had become a near-household name through a frenzied marketing campaign that included celebrity partnerships with stars such as supermodel Gisele Bundchen and basketball star Stephen Curry, and buying the naming rights for the Miami Heat's home arena.

Bankman-Fried also stepped in as a kind of savior of the industry when other crypto companies started facing difficulties, with FTX swooping in to offer them a financial lifeline.

At the height of his career, Bankman-Fried was thought to be worth $26 billion.

But his steep rise was only matched by his ignominious downfall, which saw him escorted last year by police from his luxury apartment in the Bahamas and extradited to face charges in the United States.

His empire began to crumble last November when a news report pointed to unhealthy ties between the FTX platform and Alameda Research, the company's crypto-focused investment arm.

The revelations kept growing and major investors pulled their money out of FTX, sinking it swiftly into bankruptcy and casting Bankman-Fried as a financial pariah.

Once the dust had settled, some $8.7 billion was still unaccounted for, according to the receiver appointed to manage the liquidation.

Federal prosecutor Damian Williams has accused Bankman-Fried and his associates of systematically diverting funds from FTX clients to prop up Alameda Research, but also wire fraud, securities and commodities fraud, and money laundering.

Danielle Sassoon, an assistant US attorney in Williams' office, told a hearing that the number of victims of Bankman-Fried's alleged actions could be "in excess of a million."

- Pointing fingers -

SBF -- as Bankman-Fried is known -- was extradited at the end of December from the Bahamas, where FTX was headquartered, and released on a $250 million bail upon his arrival in New York.

Pending the trial, Bankman-Fried was placed under house arrest at the Silicon Valley home of his parents, both professors at Stanford University.

But US District Judge Lewis Kaplan rescinded that decision, ordering Bankman-Fried behind bars over alleged attempts at witness intimidation.

According to prosecutors, while holed up at his parents' home, Bankman-Fried spoke regularly to journalists and passed documents to The New York Times in an effort to alter the testimony of Caroline Ellison, his ex-girlfriend and a former Alameda executive.

Ellison has also been indicted in the case: she and three other former executives have pleaded guilty and agreed to cooperate with US authorities, which may prove Bankman-Fried's undoing in front of the jury.

His former colleagues are expected to take the stand in the courtroom -- where Bankman-Fried will likely admit egregious management errors but no wrongdoing, and point the finger at Ellison.

"I didn't ever try to commit fraud on anyone. I was shocked by what happened this month," a contrite Bankman-Fried told an interviewer days after his company's collapse.

Agence France-Presse

Art market pushes on with rocky crypto romance

PARIS - The closest most people get to owning a world-famous artwork is to buy a cheap poster from a gallery, but art dealers are determined to harness technology to draw in new collectors.

Anaida Schneider, a former banker based in Switzerland, is among those promoting new ownership schemes -- for a small fee, investors can buy a digital chunk of a painting and share in the profits when she sells.

"Not everyone has $1 million to invest," she told AFP. "So I came up with the idea to split, to make like a mutual fund but on the blockchain."

Each buyer gets an NFT, the unique digital tokens created and stored on the blockchain, the computer code that underpins cryptocurrencies.

Although cryptoassets have been routed this year with plunging values, collapsing projects and widening scandals, the NFT art sector has weathered the storm better than other parts of the crypto world.

NFT artworks accounted for some $2.8 billion in sales last year and the rate has declined only slightly in the first half of this year, according to analyst firm NonFungible.

Collectors and artists are among the most eager experimenters with the technology, even if it means owning only a slice of a digital copy of a painting.

A fifth of 300 collectors surveyed by the website Art+Tech Report said they had already engaged in so-called fractional ownership.

Schneider's Liechtenstein-based company Artessere offers squares of paintings by Soviet artists including Oleg Tselkov and Shimon Okshteyn for 100 or 200 euros ($100 or $200) a piece.

She is giving herself 10 years to resell them. 

Schneider owns the paintings she sells, thus avoiding legal complications, but attempts to offer novel digital ownership schemes for publicly owned works is proving more tricky.

'Complex and unregulated' 

Thirteen Italian museums recently signed deals with Cinello, a firm that sells limited edition digital reproductions, to offer ownership of digital replicas of masterworks.

The buyer gets a unique, high-resolution digital copy to project onto a screen and a certificate from the museum, which gets half the proceeds.

The company held a splashy London show in February displaying digitised works by Renaissance masters including Raphael, Leonardo and Caravaggio. It has since sold a handful of them.

But the Italian culture ministry was reportedly irked that a replica of Michelangelo's "Doni Tondo" sold for around 240,000 euros but Florence's Uffizi gallery got less than a third of the proceeds.

A spokesman for the ministry was quoted in several outlets last month as saying the issue was "complex and unregulated" and asked museums not to sign any new contracts around NFTs.

Cinello boss Francesco Losi was not pleased with the characterization, telling AFP: "We don't sell NFTs."

Buyers can ask for an NFT to go with their image, but the firm said they had their own patented system to secure ownership, which they call DAW.

Mixed blessing 

Cinello said it had digitized more than 200 works and its sales had generated 296,000 euros in extra revenue for Italian museums.

But the firm's difficulties in Italy underline the mixed blessing of NFTs -- they bring publicity but also suspicion.

The NFT sector -- which covers anything from avatars in computer games to million-dollar cartoon apes -- is replete with scams, counterfeit works, thefts and wash trading.

Losi said he was well aware that NFTs could be used "in the wrong way" and was unsure what future they had in the art world. 

Anaida Schneider stressed that her project was protected by law in Liechtenstein, the tiny principality being among the first jurisdictions to pass a law regulating blockchain companies in 2019.

Beyond that, she said her insurance would cover damage to the artworks and she had also factored in the possibility that the paintings would fall in value, though she declined to give exact details.

"I hope it never happens," she said. "For me, it's very important to put this idea in the market."

Agence France-Presse

Crypto clients beg for their cash back after lender's crash

WASHINGTON, United States - An Irishman at risk of losing his farm. An American having suicidal thoughts. An 84-year-old widow's lost life savings: People caught in the meltdown of crypto lender Celsius are pleading for their money back. 

Hundreds of letters have poured in to the judge overseeing the firm's multi-billion-dollar bankruptcy and they are heavy with anger, shame, desperation and, frequently, regret.

"I knew there were risks," said a client whose letter was unsigned. "It seemed a worthwhile risk."

Celsius and its CEO Alex Mashinsky had billed the platform as a safe place for people to deposit their crypto currencies in exchange for high interest, while the firm lent out and invested those deposits.

But as the value of highly volatile crypto currencies plummeted -- bitcoin alone has shed over 60 percent since November -- the firm faced mounting troubles until it froze withdrawals in mid-June.

The company owed $4.7 billion to its users, according to a court filing earlier this month, and the endgame is unclear.

The letters -- posted to a public online court docket -- come from around the world and recount tragic results of users' money being frozen.

"From that hard-working single mom in Texas struggling with past-due bills, to the teacher in India with all his hard-earned money deposited in Celsius -- I believe I can speak for most of us when I say I feel betrayed, ashamed, depressed, angry," wrote one client who signed their letter E.L.

While the letters vary in their level of sophistication about the crypto world -- from self-confessed novices to all-in evangelists -- and the monetary impacts range from a few hundred dollars to seven-figure sums, nearly all agree on one thing.

"I have been a loyal Celsius customer since 2019 and feel completely lied to by Alex Mashinsky," wrote a client who AFP is not identifying to protect his privacy. "Alex would talk about how Celsius is safer than banks."

Many of the letters point to the CEO's AMA (Ask Mashinsky Anything) online chats as key to their confidence in him and the platform, which presented itself as stable until days before it froze users' funds.

"Celsius has one of the best risk management teams in the world. Our security team and infrastructure is second to none," the firm wrote on June 7. 

"We have made it through crypto downturns before (this is our fourth!). Celsius is prepared," the firm wrote.

The message also said the company had the reserves to pay its obligations, and withdrawals were being processed as normal. 

One client, who reported having $32,000 in crypto locked up at Celsius, noted the impact.

"Right up until the end, the retail investor received assurance," the client wrote to the judge.

But that changed quickly, and on June 12 Celsius announced the freeze: "We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations."

Some clients got the news in a message from the company.

"By the time I finished the e-mail, I had collapsed onto the floor with my head in my hands and I fought back tears," wrote one man who had about $50,000 in assets with Celsius.

The clients who said they were hardest hit, including a man who said he placed $525,000 he got from a government loan on Celsius, disclosed they had considered killing themselves.

Others reported heavy stress, lack of sleep and feelings of deep shame for putting their retirement savings or their children's college money into a platform that was far riskier than they knew.

"As a private unregulated company, Celsius does not come under any requirement for disclosure," is how the Washington Post summarized the situation.

Celsius did not reply to a request for comment on the clients' letters.

For people like one 84-year-old woman, who only had her roughly $30,000 in crypto savings on Celsius for a month, their hope lies in the bankruptcy proceedings.

"It's just not unusual for people to come out of something like this with zero," said Don Coker, an expert witness on banking and finance.

"Obviously I feel sorry for anyone who loses an investment like this, but it is just something where they need to be aware of the risks," he said.

Agence France-Presse

Bitcoin falls below $30,000, lowest since July 2021

TOKYO - Bitcoin slumped below $30,000 for the first time since July 2021 on Tuesday as cryptocurrencies track sinking markets with investors spooked by aggressive US monetary tightening and surging inflation.

The world's largest cryptocurrency by market value fell as low as $29,764 in Tuesday trade, before recovering above $30,000, extending a recent collapse in price as investors desert assets viewed as risky.

Bitcoin's value has more than halved since a November surge that saw the token hit a record of nearly $69,000.

While crypto enthusiasts view bitcoin as a hedge against inflation, an influx of more traditional investors tend to view it as a riskier asset.

They have been offloading bitcoin and other digital tokens along with other volatile assets like tech stocks as the US Federal Reserve moves to hike interest rates to tackle decades-high inflation.

"Bitcoin is breaking below some key technical levels as the never-ending selloff on Wall Street continues," said Edward Moya, senior market analyst for the Americas at Oanda.

"The institutional investor is paying close attention to bitcoin as many who got in last year are now losing money on their investment," he added.While the token's "long-term fundamentals have not changed in months", concerns about growth and a possible recession are creating "a very difficult environment for cryptos", Moya said.

"No one is looking to buy the crypto dip just yet and that leaves bitcoin vulnerable here."

The slump in crypto follows dives on US equities and other markets, with the tech-rich Nasdaq closing down 4.3 percent on Monday, the S&P 500 declining 3.2 percent and the Dow ending off 2.0 percent.

Agence France-Presse

Crypto-curious corporations struggle to find right recipe

Four years ago, fried-chicken chain KFC tweeted from its Canadian account that it would accept bitcoin as payment for its "buckets".

The company told AFP its tongue-in-cheek campaign -- "digital tender for chicken tenders" -- sold out in an hour and the chain has not taken crypto payments since, but online articles regularly recycle the claim that KFC "accepts" bitcoin.

Many other companies have tried to harness crypto payments before abandoning their efforts, Tesla and Dell among them.

Bitcoin will almost certainly never be practical for everyday purchases because its value fluctuates wildly, and each transaction is expensive, energy-hungry and takes at least half an hour.

"No one's going to walk into a KFC to buy a chicken burger and then have to wait 30 minutes for a payment," South African developer and crypto expert Andre Cronje told AFP.

But there are now thousands of smaller cryptocurrencies with faster processing times and more stable prices.

Analysts say the total market value of cryptocurrencies has now topped $2 trillion, roughly half of which is bitcoin.

Companies are gagging to get in on the act and developers like Cronje are building the infrastructure to enable the virtual coins to be used to pay for everyday items.

But public buy-in is crucial, and corporations seem to be struggling to find the perfect formula.

'Watch the jockeying'

Microsoft typifies the emerging pattern of big companies dabbling in crypto.

The first rule: keep it at arm's length from the core business.

The tech giant has stressed that shareholders will not be exposed to the ups and downs of crypto prices.

PayPal and Apple, two other crypto-curious corporations, have made similar pledges to their shareholders.

To keep crypto off its balance sheet, Microsoft partnered with a firm called Bakkt that allows clients to convert crypto assets into products like gift cards for Xbox, or charge their Starbucks payment card.

Bakkt, which has received investments from Microsoft's venture capital fund M12, went public last year and a flurry of big partnership announcements with the likes of Mastercard sent its share price soaring.

But then came the nose-dive as it reported widening losses and its business came under scrutiny.

The firm had said it expected to have nine million customers by the end of 2021, yet its executives gave a figure of 1.7 million transacting accounts late last year.

PayPal, meanwhile, garnered a lot of publicity for a "checkout with crypto" feature launched in the US and UK last year.

PayPal's system converts users' cryptoassets into money before passing on payment to the vendors.

But it is unclear how popular any of these services are -- none of these companies responded to AFP requests for details of the uptake.

Market watchers say it is too early to tell how these forays into crypto will play out.

"My view is to not get too excited yet but just watch the jockeying," said analyst John Freeman of CFRA research, accepting the hot air made it difficult to predict what would happen next.

'When, not if'

The barriers to widespread adoption of direct crypto payments for everyday items are considerable -- perhaps even unsurmountable.

Developer Cronje said he functioned largely without the need for regular cash or banks by using services like BitPay and BitRefill, which allow crypto to be spent anywhere from Amazon to Uber.

But he accepted his less tech-savvy friends "would be broke very quickly" if they tried to rely on the blockchain, the technology that underpins cryptocurrencies.

Instead, he envisages a future where people will continue to use credit cards and banks but back-end tasks will be largely automated on the blockchain.

"This is a technology that conservatively is going to save them between 20 percent and 25 percent of their overheads and their costs," he said. 

"So it's not a matter of if, it's a matter of when."

Meanwhile, non-financial businesses will continue to throw themselves into the crypto space, often to emerge slightly wiser but no richer.

The Pavilions hotel chain, for example, partnered with a payments firm last year to allow customers to use crypto but found it made little difference to its business.

"It turns out no one likes to spend their bitcoins, even on holidays!" Pavilions spokesman Tim Sargeant told AFP in an email.

"It has shown us that bitcoin is more an investment tool than something people wish to part with for payment."

Agence France-Presse

Dubai grants crypto exchange Binance a virtual asset licence

DUBAI - The world's largest cryptocurrency exchange Binance has been granted a licence to conduct some operations in Dubai, the company said, from where it plans to carry out regional business.

The awarding of the Virtual Asset Licence from Dubai's recently formed Virtual Asset Regulatory Authority (VARA) comes after Gulf neighbor Bahrain on Tuesday awarded Binance a crypto-asset service provider licence, its first such licence from a Gulf Cooperation Council (GCC) country. Read full story

"Binance will be permitted to extend limited exchange products and services to pre-qualified investors and professional financial service providers. All licensed VARA service providers will be monitored progressively to open access to the retail market," Binance said in a statement.

The crypto company will also anchor a blockchain technology hub in the Dubai World Trade Centre (DWTC), it said.

Financial regulators across the world have targeted Binance, with some banning the platform from certain activities and others warning consumers that it was not licensed to operate in their jurisdictions. 

The United Arab Emirates (UAE), the Gulf region's financial capital, has been pushing to develop the virtual asset sector and regulation to attract new forms of business as regional economic competition heats up.

Dubai, one of the UAE's seven emirates, last week adopted its first law governing virtual assets and established VARA as a regulator to oversee the sector.

Binance said in December it was working with DWTC to help set up an international virtual asset ecosystem in Dubai and assist with the development of virtual asset regulations.

"Binance will be able to operate its regional business from Dubai in the newly announced regulatory ecosystem that is subject to comprehensive legislation and internationally applicable policy frameworks," DWTC Authority Director General Helal Saeed Almarri said.

-reuters-

Rouble-crypto trading soars as sanctions hit Russian currency

Trading volumes between the Russian rouble and the Tether cryptocurrency spiked sharply on Monday as the local currency tumbled to a record low on Western sanctions, data shared with Reuters showed.

Rouble-denominated trades with the Tether - a so-called stablecoin - hit $29.4 million, their highest this year and around three times more than a week earlier, according to Arcane Research, an Oslo-based digital asset researcher.

Stablecoins are a type of cryptocurrency designed to avoid the wild fluctuations that plague bitcoin. In theory, their steady value allows users to protect funds or savings in times of economic stress.

The figures suggest surging interest in crypto among Russians after Western sanctions imposed on Moscow for its invasion of Ukraine took a toll on the local currency.

The Russian rouble tumbled to a record low in volatile trade on Monday, losing a third of its value so far this year, after the West ramped up sanctions including blocking banks from the SWIFT global payments system. 

Trading between the rouble and bitcoin (BTC), whose 13-year history has been peppered with wild price swings - was more muted, the data showed.

Rouble-bitcoin trading on Thursday topped $16 million, its highest this year, as Russia launched its invasion. On Monday it totalled about $8.5 million.

"People with the rouble are trying to get out of it due to the drastic devaluation after all the sanctions," said Arcane's Bendik Norheim Schei.

"Under the current market conditions, I'm not surprised to see investors, at least those in Russia, seeking stablecoins and not taking on the market risk of BTC. This is about saving their funds, not investing."

-reuters-

Bitcoin tops $60,000 on US fund approval hopes

Bitcoin breached the $60,000 mark for the first time since April on growing optimism that American regulators will greenlight the first US futures exchange-traded fund for the cryptocurrency.

The digital currency was up more than 40 percent from a month ago, reaching $62,253 at 2050 GMT, according to Bloomberg News data, which reported that the US Securities and Exchange Commission could allow the ETF to trade next week.

The SEC has rejected attempts to create a Bitcoin ETF since 2013.

"An SEC Bitcoin ETF approval is a watershed moment for the crypto industry as this could be the key driver for getting the next wave of crypto investors," said Edward Moya, senior market analyst at OANDA.

An ETF is a financial instrument that can include different assets and be traded on an exchange like other securities. A futures ETF means the product will be bought or sold at set price at a later date.

The SEC fuelled speculation of the imminent approval after writing the following advice on one of its accounts on Twitter: "Before investing in a fund that holds Bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits."

The ETF would add to an eventful year for the world's leading cryptocurrency, which hit a record high at $64,870 in April and became a legal tender in El Salvador, the first country to adopt it officially.

China, meanwhile, has cracked down on trading and mining cryptocurrencies, which are created through solving complex equations— an endeavor that consumes enormous amounts of energy.

SEC U-turn 

Bloomberg, which cited unidentified people familiar with the matter, reported that unlike past Bitcoin ETF applications that the SEC rejected, the proposals made by financial firms ProShares and Invesco are based on futures contracts.

The proposals were filed under mutual fund rules that SEC Chairman Gary Gensler has said provide "significant investor protections," the news agency reported.

"This is a key development for the crypto space as it would allow many investors who were on the fence to enter the market in more traditional ways," said Walid Koudmani, analyst at XTB online trading.

An ETF would reassure investors "about previously associated risks such as lack of regulations and the possibility of having their wallet hacked," Koudmani said.

There are ETFs that include Bitcoin in other countries but getting one in the United States would take the cryptocurrency to another level.

"In America's case, it's the largest, most important market. To date, they (traditional investors) haven't had a simple vehicle in which to invest in Bitcoin," Charlie Erith, CEO of ByteTree Asset Management, which specializes in cryptocurrencies, told AFP.

Erith cautioned that "the impact on the market might be overblown. You might see a short selloff but it won't be meaningful."

But, he added, "long term, it's an important development. It signals that authorities are getting more comfortable with people owning cryptoassets."

Agence France-Presse

New money: Central banks lay out operating manual for digital cash

LONDON - A group of central banks sketched out a potential operating manual for digital cash on Thursday as they aim to strike a balance between keeping up with cryptocurrencies and concerns that the new technology could upend commercial lenders.

Worried that the explosion of bitcoin and its ilk could weaken their control of money, policymakers from Beijing to Washington are exploring central bank digital currencies, known as CBDCs.

And while a widely-used digital dollar or euro may still be years away, work by central banks is gathering pace as consumers increasingly ditch coins and notes in favor of digital payments on debit or credit cards and mobile phones.

The seven central banks - including those in the United States, Britain and the ECB in the euro zone, but not China - said publicly-used "retail" CBDC must harness both public and private players to mesh with existing payment systems.

The tech should be useable with existing domestic payments systems, with strategies for adoption tailored to on-the-ground economic conditions, said the central banks, working alongside the Bank for International Settlements.

The existing financial system must be given time to adjust to the introduction of CBDC, they said, flagging risks of what could amount to slow-motion bank runs if commercial bank customers suddenly shifted savings to the new tech.

"Regardless of the design, developing and running a CBDC system would be a major undertaking for a central bank," they said, stressing the involvement of private operators must be closely monitored to ensure public trust in the tech.

STABILITY RISKS

Unlike cryptocurrencies like bitcoin that are usually run by private actors, CBDCs would be equivalent to cash, issued and backed by central banks. They differ from the electronic money used in billions of transactions daily that is mostly funnelled via commercial banks.

The People's Bank of China is the most advanced among major economies on CBDCs, and is planning its biggest digital yuan trial at the 2022 Beijing Winter Olympics.

Meanwhile, the US Federal Reserve will "soon" release research examining the costs and benefits of a CBDC, Fed Chair Jerome Powell said last week.

Commercial banks, fretting that a retail-focused CBDC could cannibalize their deposit bases, are trying to exert influence on their design.

The central banks sought to downplay the threat of retail-focused CBDC to lenders' business models.

"Our analysis suggests the impacts on bank disintermediation and lending could be manageable for the banking sector," they said, with any impact likely limited in "plausible" levels of adoption.

-reuters-

Bitcoin bruised after chaotic debut as legal tender in El Salvador

TOKYO - Bitcoin licked its wounds on Wednesday, a day after its heaviest losses in 2-1/2 months as El Salvador's historic adoption of the crypto asset as legal tender caused chaos online and on the street.

The coin last traded at $46,560, having endured wild trade the day before in which it hit a near four-month high of $52,956 before plunging 11.1 percent, its largest fall since June 2.

Analysts said the sharp retreat was partly due to investors who had bought the rumour of El Salvador's move now selling the fact.

"I think there was some anticipation building ahead of that event (El Salvador), similar to what we saw ahead of Coinbase listing on Nasdaq," said Henrik Andersson, chief investment officer at Apollo Capital, a crypto asset fund in Melbourne, Australia.

At one point on Tuesday, the digital currency fell as much as 18.6 percent, wiping out more than $180 billion from the market.

It was a historical day for bitcoin as El Salvador's experiment of making it legal tender got off to a bumpy start.

Technological glitches hampered its use while street protests by mistrustful citizens broke out in the Central American country.

As bitcoin wobbled, Salvadoran President Nayib Bukele said his government purchased an additional 150 bitcoins on Tuesday, worth around $7 million.

"That has underscored the difficulty in trying to protect the value of bitcoin as its own currency," said Nana Otsuki, chief economist at Monex Securities. "The buying didn't seem to be effective in halting its fall."

Amid the trading frenzy, major U.S. cryptocurrency exchanges Coinbase Global Inc, Kraken and Gemini struggled with delays in some transactions. All of them said their systems have since been restored.

Separately, the U.S. securities regulator has threatened to sue Coinbase Global if the crypto exchange proceeds with plans to launch a programme allowing users to earn interest by lending crypto assets. 

(Reporting by Hideyuki Sano, Anushka Trivedi; Editing by Sam Holmes)

-reuters-

Bitcoin jumps above $50,000 for first time since May

HONG KONG - Bitcoin broke back above $50,000 on Monday for the first time in three months as investors piled back into the cryptocurrency on bargain-buying.

The unit climbed around two percent to a peak of $50,249.15, its highest level since mid-May.

Agence France-Presse

The curious case of the $600 million crypto heist

Cryptocurrency investors have been transfixed over the past few days by the antics of a mysterious hacker who stole more than $600 million -- before giving some of it back.

But is the thief a good samaritan who stole the money to expose a dangerous security flaw, or did they simply realize they were about to be caught?

The hacker struck Poly Network, a company that handles cryptocurrency transfers, on Tuesday in one of the biggest thefts of digital monies in history.

By Thursday they had returned some $342 million -- still far short of the total, but enough to raise furious speculation over their motives.

In messages embedded in the transactions, the thief insisted they stole with good intentions.

"I am not very interested in money!" they wrote, adding it was "always the plan" to return the stolen funds.

- Digital sleuths -

Despite their volatility and concerns over the huge waste of electricity they generate, cryptocurrencies like Bitcoin and Ethereum have soared in popularity in recent years.

Their combined market value currently stands at nearly $2 trillion, creating alluring prospects for hackers. 

Most notoriously, thieves stole 850,000 Bitcoins from Japanese exchange Mt. Gox in 2014. Worth around $470 million at the time, the coins would today be worth a staggering $38 billion.

Another Japanese exchange, Coincheck, was hacked for nearly $500 million in 2018.

But in both cases, the technology that cryptocurrency uses allowed some of the funds to be traced -- even though for Mt. Gox, it came too late to save the company. 

Cryptocurrencies use blockchains, digital ledgers that record every transaction made.

Pawel Aleksander, an expert in tracking stolen cryptocurrency, said thieves typically try to cover their tracks by splitting the money up and moving it around -- "sometimes using hundreds of thousands of consecutive transactions". 

But his company Coinfirm is among a growing number that specialize in following dizzyingly complicated blockchain transactions, helping law enforcement agencies and investors to trace stolen assets. 

While some crypto-aficionados are hailing the Poly hacker as a hero, others suspect they began handing the money back because sleuths were on their trail.

The returns began after SlowMist, another investigative firm, claimed to have identified some of the hacker's personal details, including their email.

"It's hard to say what the hacker's initial intention was," said Aleksander's colleague Roman Bieda.

"The hacker could be simply afraid of action taken against him," he suggested, although he added that "white hat" ethical hackers do often seek to publicly shame companies for their security flaws.

Some investors would also consider it a "fair bargain" for the hacker to keep some of the money, as a reward for finding the security flaw, Bieda said.

- End of the Wild West? -

Crimes involving cryptocurrencies are on a downward trend, despite spectacular thefts like this one and concerns about their use by criminal gangs.

A report this month by security firm CipherTrace estimated global crypto-crime losses at $1.9 billion last year, down from $4.5 billion in 2019. 

It did, however, warn of an alarming rise in hacking and fraud linked to decentralized finance, or "defi" -- a form of crypto-financing, including loans, designed to cut out intermediaries like banks. 

The Poly heist is part of that trend, with the company calling it the biggest hack "in defi history". 

"The imagination of fraudsters in this industry is constantly developing," said Syedur Rahman, a British lawyer who specializes in cases involving cryptocurrencies. 

But he added that tighter regulations are increasingly forcing cryptocurrency exchanges to verify users' identities, while law enforcement agencies are growing more experienced in handling crypto-crimes.

Hackers extracted a $4.4 million ransom in Bitcoin from oil company Colonial Pipeline in May, but the FBI was able to track down most of the coins and seize them. 

Retrieving stolen crypto-assets can still be difficult, however. 

"Criminal activities in crypto are very much multinational," said Aleksander.

"It's typical that the victims sit in different jurisdictions, and the exchanges are registered in different jurisdictions."

Victims' battle to claw back money stolen in the Mt. Gox hack has been bogged down in years of international litigation. 

And hiring sleuths to trace stolen assets is an expensive option that is often out of reach for individual investors hit by hackers.

"When you have a consumer who has lost a nominal sum, there's not much that can be done," said Rahman. 

Agence France-Presse

Binance, the giant crypto exchange under regulatory scrutiny

LONDON - Britain's financial watchdog has barred major cryptocurrency exchange Binance from carrying out regulated activities, the latest in a string of moves against the platform by authorities across the world.

Here are answers to some key questions on Binance, one of the world's biggest exchanges, and what the latest regulatory moves mean.

HOW BIG IS BINANCE?

Very.

Trading volumes in June were $662 billion, up almost ten-fold from July 2020, according to data from CryptoCompare. On a single day in May, daily volumes hit $92 billion, US researcher Coin Metrics said.

Headed by Canadian Changpeng Zhao, Binance offers a wide range of services to users across the globe, from crypto spot and derivatives trading to tokenised versions of stocks.

It also runs an exchange that allows users to trade directly with each other. Its own cryptocurrency, Binance Coin, is the fourth-biggest in the world.

Binance is growing in popularity in Britain, where its app has been downloaded 1.8 million times in 2021, and 2.2 million times in total, according to mobile data firm Sensor Tower.

WHERE'S IT BASED?

It's unclear.

Binance's corporate structure is opaque, with its holding company widely reported to be registered in the Cayman Islands. A Binance spokesperson declined to comment on its location, saying it was "decentralized" and that it "works with a number of regulated entities around the world".

Binance has built up a huge following across the world, with channels on the Telegram social media app for users in more than 30 countries.

AND IT'S COMING UNDER SCRUTINY FROM REGULATORS?

Yes - in Britain and elsewhere.

Britain's Financial Conduct Authority (FCA) said last week Binance's UK arm cannot conduct any regulated activity, without saying why it took the action.

Crypto trading is generally unregulated in Britain, though some activities such as offering crypto derivatives do require permission.

Regulators including the FCA are increasingly worried over the standard of anti-money laundering checks at crypto exchanges and the risks crypto trading poses to consumers.

Japan's regulator said last week Binance was operating in the country illegally, while Germany's watchdog said in April it risked being fined for offering tokens connected to stocks. In May, Bloomberg reported Binance is under investigation by the US Justice Department and Internal Revenue Service.

Yet national regulators often struggle to rein in crypto exchanges based elsewhere, lawyers said.

"It's very difficult," said Simon Treacy, senior lawyer at Linklaters. "(The FCA) don't have jurisdiction over the whole of Binance's operations, so they use the point where they do have jurisdiction and put pressure on the business there."

The Binance spokesperson said it takes its compliance obligations very seriously and is committed to following all regulatory requirements wherever it operates.

HOW WILL THE UK MOVE IMPACT BINANCE?

Its influence may be limited.

Beyond a loud warning to investors, the FCA has done all it can under its limited powers over an offshore exchange, experts say.

"At the moment the method is to emphasize risks to investors in the UK of these services rather than to regulate them outright," said Barney Reynolds, a lawyer at Shearman & Sterling.

UK investors can still access Binance via its main website, which the FCA does not have powers over.

Still, the FCA's demand that Binance seeks its permission to offer regulated services means it would be an offence to suggest to investors it was regulated in the UK.

Binance will also have to rethink plans announced last year to offer crypto trading services using pounds and euros on a platform regulated by the UK.

Google said this week it would only allow FCA-authorized entities to run ads for UK-based financial products on its website, after repeated FCA calls to crack down on online fraud.

Concern at banks over investment scams and fraud involving crypto exchanges may also impact Binance. Britain's Natwest Group last week capped the daily amount customers can send to exchanges, including Binance.

-reuters-

Meme-based cryptocurrency Dogecoin soars 40 percent to all-time high

LONDON - Meme-based virtual currency Dogecoin soared on Wednesday to an all-time high, extending its 2021 rally to become the fourth-biggest digital coin.

Dogecoin, launched as a satirical critique of 2013's cryptocurrency frenzy, has climbed 41 percent in the last 24 hours to a record $0.68, according to CoinMarketCap.

This year alone it has soared over 14,000 percent, from $0.00468 on Dec. 31, taking it past more widely used cryptocurrencies such as the Tether stablecoin and XRP to become the fourth-largest by market capitalization.

Dogecoin - whose logo features a Shiba Inu dog at the center of the meme - remains little used in commerce or payments. Like other digital coins, it is highly volatile and its price is heavily influenced by social media users.

On Tuesday, the New York crypto exchange Gemini said it would start letting users trade and custody the token.

Some cryptocurrency market players said its volatility was its main draw, with a mixture of retail investors and market makers fuelling its trading volumes.

"The ugly truth is that a lot of crypto valuations are divorced from reality anyway," said Joseph Edwards, head of research at crypto brokerage Enigma Securities.

"Right now, (Dogecoin) is being seen as it's always been seen - an asset with surprising staying power that provides opportunities to take advantage of volatility every year or so."

Dogecoins are now cumulatively worth $88 billion, compared to bitcoin's $1 trillion and ethereum's $391 billion. 

-reuters-

Ethereum breaks past $3,000 to quadruple in value in 2021

SINGAPORE - Cryptocurrency ether broke past $3,000 on Monday to set a new record high in a dazzling rally that has outshone the bigger bitcoin, as investors bet that ether will be of ever greater use in a decentralized future financial system.

Ether, the token transacted on the ethereum blockchain, rose 3% on the Bitstamp exchange to $3,051.99 by lunchtime in Asia. It is up more than 300% for the year so far, easily outpacing a 95% rise in the more popular bitcoin.

In part, the big rally is a catch-up to late 2020 gains in bitcoin, said James Quinn, managing director at Q9 Capital, a Hong Kong cryptocurrency private wealth manager.

It also reflects improvements to the ethereum blockchain, he said, and a growing shift towards "DeFi", or decentralized finance, which refers to transactions outside traditional banking for which the ethereum blockchain is a crucial platform.

"At first, the rally was really led by bitcoin because as a lot of the institutional investors came into the space, that would be their natural first port of call," Quinn said.

"But as the rally has matured over the last six months, you have DeFi and a lot of DeFi is built on ethereum."

The launch of ether exchange-traded funds in Canada and surging demand for ether wallets to transact non-fungible tokens such as digital art have also pushed up the price.

The ether/bitcoin cross rate has soared more than 100% this year and hit a 2.5-year high on Sunday, pointing to a degree of rotation into the second-biggest cryptocurrency as investors diversify their exposure.

"Surging DeFi volumes continue to push ethereum prices higher as investors gain confidence in crypto and see ethereum as a safe second-place asset," said Jehan Chu, managing partner at Hong Kong blockchain venture capital firm Kenetic Capital.

Illustrating the momentum for such new transactions, Bloomberg reported last week that the European Investment Bank plans on issuing a digital bond over the Ethereum blockchain, while JP Morgan plans a managed bitcoin fund.

Bitcoin, the world's biggest crypto asset with more than $1 trillion in market capitalization, regained the $50,000 mark last week and hovered around $58,000 on Monday, up about 3% but well below its record high at $64,895.22.

The US dollar was broadly steady.

-reuters-

Coinbase heads for $89 billion valuation in Nasdaq debut

Shares of Coinbase Global Inc were set to jump 36 percent above their reference price in the cryptocurrency exchange's market debut on Wednesday, the latest sign of the surge in interest and trading in bitcoin and other digital currencies.

At 10:12 a.m. ET, the company's stock was indicated to open at $340, up from a reference price of $250 per share.

At the indicated price, the digital asset exchange would be valued at around $89 billion. 

-reuters-

Bitcoin hits record high of $62,575

LONDON - Bitcoin hit a record of $62,575 on Tuesday, extending its 2021 rally to new heights.

The world's biggest cryptocurrency has more than doubled in price this year amid growing mainstream acceptance as an investment and a means of payment, and as investors seek high-yielding assets amid low interest rates.

Major firms including BNY Mellon, Mastercard Inc., and Tesla Inc are among those to have embraced or invested in cryptocurrencies. 

-reuters-

S&P 500 sets record high, crypto market cap passes $2 trillion

NEW YORK - A string of surprisingly robust economic data boosted investor risk appetite on Monday, which sent the S&P 500 and the Dow to all-time closing highs and boosted cryptocurrency market cap over the $2 trillion hurdle.

Friday's employment report showed the economy added 916,000 jobs last month, suggesting stimulus and vaccine deployment have jump-started what could be the strongest yearly economic performance in decades.

Enthusiasm over the growing momentum of economic recovery was boosted on Monday with the Institute for Supply Management's nonmanufacturing PMI report, which showed the pandemic-battered services sector expanded at a record pace in March.

"You're seeing pretty broad-based strength and that's a positive for the market," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "That kind of breadth in the market, it tends to portend advances that have legs."

That broad-based strength carried over into cryptocurrencies.

Demand for digital cash continues to grow, with market cap hitting a record high of $2 trillion on Monday.

"It's a risk-on day, and an environment where people are willing to take on risk helps the crytocurrencies," Carlson added.

The Dow Jones Industrial Average rose 373.98 points, or 1.13%, to 33,527.19, the S&P 500 gained 58.04 points, or 1.44%, to 4,077.91 and the Nasdaq Composite added 225.49 points, or 1.67%, to 13,705.59.

The dollar dipped to a one-week low against a basket of currencies as U.S. stocks rallied, although low liquidity in many parts of the world off for Easter holidays may have exaggerated the move.

The dollar index fell 0.46%, with the euro up 0.4% to $1.1809.

The Japanese yen strengthened 0.48% versus the greenback at 110.20 per dollar, while Sterling was last trading at $1.3903, up 0.54% on the day.

European and Australian stock markets were closed in observance of Easter Monday, while China's stock market was dark in observance of Tomb Sweeping day.

MSCI's gauge of stocks across the globe gained 0.97%.

Emerging market stocks rose 0.06%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.03% higher, while Japan's Nikkei rose 0.79%.

US Treasury yields dipped as investors consolidated their positions, though the uptrend remains intact in the wake of Friday's payrolls report.

Benchmark 10-year notes last rose 3/32 in price to yield 1.7127%, from 1.72% late on Friday.

The 30-year bond last rose 7/32 in price to yield 2.3541%, from 2.37% late on Friday.

Oil prices fell as increasing OPEC+ supply and rising Iranian output, along with the threat of a new wave of COVID-19 infections, offset hopes for a demand rebound driven by economic revival.

US crude settled at $58.65 per barrel, down 4.6% on the day, while Brent shed 4.18% to end at $62.15 per barrel.

Gold prices edged lower as the safe-haven metal's luster was dimmed by rising global equity prices.

Spot gold dropped 0.1% to $1,727.98 an ounce. U.S. gold futures settled little changed at $1,728.80.

-reuters-

PayPal allows US shoppers to make cryptocurrency purchases

SAN FRANCISCO - PayPal on Tuesday began allowing people in the United States to use cryptocurrency to make purchases from millions of merchants that use the financial platform for online transactions.

The payments giant had already let users buy, sell or store digital money, but the new Checkout with Crypto feature provides an option to use it for purchases.

"As the use of digital payments and digital currencies accelerates, the introduction of Checkout with Crypto continues our focus on driving mainstream adoption of cryptocurrencies," PayPal chief executive Dan Schulman said in a blog post.

"Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies."

Merchants get paid in standard money, with PayPal converting cryptocurrency to US dollars to settle transactions at the time of sale, according to the Silicon Valley-based company.

Tesla last week began officially accepting bitcoin as currency to purchase electric autos, according to a tweet by chief executive Elon Musk.

"You can now buy a Tesla with bitcoin," Musk said on Twitter, implementing a plan announced in February to accept the cryptocurrency as a form of payment.

Agence France-Presse