UK Launches Task Force To Scrutinize Cryptocurrency Risks and Benefits ( 23

U.K. Finance Minister Philip Hammond unveiled a task force that examines the risks and benefits of cryptocurrencies on Thursday. From a report: Hammond announced Thursday that the task force includes Britain's central bank, the Bank of England (BOE), and the Financial Conduct Authority (FCA) watchdog. He said that the BOE and FCA would also take the "first steps" toward automating financial compliance in Britain. The cryptocurrency task force is part of a wider fintech, or financial technology, strategy laid out by Westminster. As part of its initiative, the U.K. signed an agreement dubbed a "fintech bridge" with Australia on Thursday that will enable British fintech firms to sell products and services in Australia. The deal will also look to build cooperation on policies and regulation surrounding the sector, Hammond said. Hammond said he wanted to make the U.K. the "most attractive home" for global fintech firms.

A 15-Year-Old Hacked the Secure Ledger Crypto Wallet ( 66

An anonymous reader quotes a report from TechCrunch: A 15-year-old programmer named Saleem Rashid discovered a flaw in the popular Ledger hardware wallet that allowed hackers to grab secret PINs before or after the device was shipped. The holes, which Rashid described on his blog, allowed for both a "supply chain attack" -- meaning a hack that could compromise the device before it was shipped to the customer -- and another attack that could allow a hacker to steal private keys after the device was initialized. The Ledger team described the vulnerabilities dangerous but avoidable. For the "supply chain attack," they wrote: "by having physical access to the device before generation of the seed, an attacker could fool the device by injecting his seed instead of generating a new one. The most likely scenario would be a scam operation from a shady reseller." "If you bought your device from a different channel, if this is a second hand device, or if you are unsure, then you could be victim of an elaborate scam. However, as no demonstration of the attack in the real has been shown, it is very unlikely. In both cases, a successful firmware update is the proof that your device has never been compromised," wrote the team.

Further, the post-purchase hack "can be achieved only by having physical access to the device, knowing your PIN code and installing a rogue unsigned application. This rogue app could break isolation between apps and access sensitive data managed by specific apps such as GPG, U2F or Neo." Ledger CEO Eric Larcheveque claimed that there were no reports of the vulnerability effecting any active devices. "No one was compromised that we know of," he said. "We have no knowledge that any device was affected." Rashid, for his part, was disappointed with the speed Ledger responded to his claims.


Twitter CEO Says Bitcoin Will Be the World's 'Single Currency' In 10 Years ( 237

In a recent interview with The Times, Twitter and Square CEO Jack Dorsey said he believes that bitcoin will become the world's single currency within 10 years. "The world ultimately will have a single currency, the internet will have a single currency," said Dorsey. "I personally believe that it will be bitcoin." Dorsey went on to say that the transition would happen "probably over ten years, but it could go faster." The Verge reports: That Dorsey is a fan of bitcoin isn't too surprising, though. In addition to serving as the CEO of Twitter, Dorsey is also the CEO of Square, which recently added the option to buy and sell Bitcoin directly from the Square Cash app. The company also released an illustrated children's story touting the benefits of the digital currency. As for Dorsey himself, he's gone on the record in an interview with The Verge's own Lauren Goode about the benefits of bitcoin as a currency, describing it as the "next big unlock" for the world of finance. (Dorsey owns an unspecified amount of the cryptocurrency.)

The NSA Worked To 'Track Down' Bitcoin Users, Snowden Documents Reveal ( 60

An anonymous reader shares a report: Classified documents provided by the whistleblower Edward Snowden show the National Security Agency worked urgently to target Bitcoin users around the world -- and wielded at least one mysterious source of information to "help track down senders and receivers of Bitcoins," according to a top-secret passage in an internal NSA report dating to March 2013. The data source appears to have leveraged NSA's ability to harvest and analyze raw, global internet traffic while also exploiting an unnamed software program that purported to offer anonymity to users, according to other documents.

Although the agency was interested in surveilling some competing cryptocurrencies, "Bitcoin is #1 priority," a March 15, 2013 internal NSA report stated. The documents indicate that "tracking down" Bitcoin users went well beyond closely examining Bitcoin's public transaction ledger, known as the Blockchain, where users are typically referred to through anonymous identifiers; the tracking may also have involved gathering intimate details of these users' computers. The NSA collected some Bitcoin users' password information, internet activity, and a type of unique device identification number known as a MAC address, a March 29, 2013 NSA memo suggested. In the same document, analysts also discussed tracking internet users' internet addresses, network ports, and timestamps to identify "BITCOIN Targets."


Child Abuse Imagery Found Within Bitcoin's Blockchain ( 320

German researchers have discovered unknown persons are using bitcoin's blockchain to store and link to child abuse imagery, potentially putting the cryptocurrency in jeopardy. From a report: The blockchain is the open-source, distributed ledger that records every bitcoin transaction, but can also store small bits of non-financial data. This data is typically notes about the trade of bitcoin, recording what it was for or other metadata. But it can also be used to store links and files. Researchers from the RWTH Aachen University, Germany found that around 1,600 files were currently stored in bitcoin's blockchain. Of the files least eight were of sexual content, including one thought to be an image of child abuse and two that contain 274 links to child abuse content, 142 of which link to dark web services. "Our analysis shows that certain content, eg, illegal pornography, can render the mere possession of a blockchain illegal," the researchers wrote. "Although court rulings do not yet exist, legislative texts from countries such as Germany, the UK, or the USA suggest that illegal content such as [child abuse imagery] can make the blockchain illegal to possess for all users. This especially endangers the multi-billion dollar markets powering cryptocurrencies such as bitcoin."

New York Power Companies Can Now Charge Bitcoin Miners More ( 126

Last Wednesday, the New York State Public Service Commission (PSC) ruled that municipal power companies could charge higher electricity rates to cryptocurrency miners who try to benefit from the state's abundance of cheap hydroelectric power. Ars Technica reports: Over the years, Bitcoin's soaring price has drawn entrepreneurs to mining. Bitcoin mining enterprises have become massive endeavors, consuming megawatts of power on some grids. To minimize the cost of that considerable power draw, mining companies have tried to site their operations in towns with cheap electricity, both in the U.S. and around the world. In the U.S., regions with the cheapest energy tend to be small towns with hydroelectric power. But mining booms in small U.S. towns are not always met with approval. A group of 36 municipal power authorities in northern and western New York petitioned the PSC for permission to raise electricity rates for cryptocurrency miners because their excessive power use has been taxing very small local grids and causing rates to rise for other customers. The PSC responded on Wednesday that it would allow those local power companies to raise rates for cryptocurrency miners. The response noted that New York's local power companies, which are customer-owned and range in size from 1.5 MW to 122 MW, "acquire low-cost power, typically hydro, and distribute the power to customers at no profit." If a community consumes more than what has been acquired, cost increases are passed on to all customers. "In Plattsburgh, for example, monthly bills for average residential customers increased nearly $10 in January because of the two cryptocurrency companies operating there," the PSC document says. The city of Plattsburgh, New York has since imposed an 18-month moratorium on commercial cryptocurrency mining to "protect and enhance the city's natural, historic, cultural and electrical resources."

Trump Bans Venezuela's New National Cryptocurrency ( 169

An anonymous reader quotes a report from CNBC: President Donald Trump issued an executive order Monday banning any transactions within the United States involving any digital currency issued by, for, or on behalf of the Government of Venezuela. The order applies to U.S. citizens as well as anyone within the United States, and includes cryptocurrency issued on or after January 9. President Trump's order is in response to recent attempts by Venezuelan President Nicolas Maduro's regime to "circumvent U.S. sanctions by issuing a digital currency," the White House said in a statement. Venezuela launched its oil-backed cryptocurrency in February to help pull the country out of a continuing economic crisis. President Maduro said each petro token will be backed by one barrel of the state's national petroleum. Maduro also said roughly 100 million tokens would be issued -- estimated to be worth around $6 billion. Bitcoin prices dropped about $200 to around $8,388, according to Coinbase, following the order.

Twitter Will Ban Most Cryptocurrency-Related Ads ( 35

An anonymous reader writes: Twitter plans to ban most cryptocurrency-related ads in the next few weeks, as Sky News first reported and a source confirms to Axios. Why it matters: The recent boom in cryptocurrencies and digital tokens has unsurprisingly attracted some fraudsters. Twitter is following in the footsteps of Facebook and Google, though it's been having its own problems with accounts promoting scams.

For the First Time, a US City Has Banned Cryptocurrency Mining ( 198

CaptainDork writes: The city of Plattsburgh, New York is imposing an 18-month moratorium on commercial cryptocurrency mining. The official reasoning for the moratorium is to "protect and enhance the City's natural, historic, cultural and electrical resources." Plattsburgh residents have seen skyrocketing electrical bills -- as much as $100 to $200 increases -- as a result of commercial cryptomining operations that mine for cryptocurrencies like bitcoin, according to Plattsburgh Mayor Colin Read, who spoke with Motherboard. The city is taking action to protect its citizens from those rising electrical bills that the city of Plattsburgh says is caused by cryptomining operations.

It turns out that commercial cryptocurrency mining operations used up so much electricity that the city of Plattsburgh exceeded its allotted monthly budget of electricity. One single cryptocurrency mining operation called Coinmint used up around 10% of the city's allotted power supply alone in January and February, according to Motherboard. When its electrical budget was exceeded in January, the city had to buy electricity from the open market at a higher cost, which was distributed among its residents.


Bitcoin's Highly Anticipated 'Lightning Network' Goes Live ( 132

Lightning Labs on Thursday announced the beta release of its highly-anticipated Lightning Network Daemon (LND), a developer-friendly software client used to access Bitcoin's Lightning Network, anonymous readers wrote, citing media reports. From a report: Bitcoin supporters believe that the network has the potential to help the cryptocurrency achieve mass adoption. Bitcoin has struggled in recent months with slow and high-fee transactions, which make it harder for bitcoin to achieve mainstream popularity. Lightning Labs, the company behind the network, also announced on Thursday that it has received investments from major financial technology players, including Square chief executive and Twitter co-founder Jack Dorsey and PayPal chief operating officer David Sacks.

Google Will Ban All Cryptocurrency-related Advertising ( 108

Google is cracking down on cryptocurrency-related advertising. From a report: The company is updating its financial services-related ad policies to ban any advertising about cryptocurrency-related content, including initial coin offerings (ICOs), wallets, and trading advice, Google's director of sustainable ads, Scott Spencer, told CNBC. That means that even companies with legitimate cryptocurrency offerings won't be allowed to serve ads through any of Google's ad products, which place advertising on its own sites as well as third-party websites. This update will go into effect in June 2018, according to a company post. "We don't have a crystal ball to know where the future is going to go with cryptocurrencies, but we've seen enough consumer harm or potential for consumer harm that it's an area that we want to approach with extreme caution," Scott said.

In a Remarkable Turn of Events, Hackers -- Not Users -- Lost Money in Attempted Cryptocurrency Exchange Heist ( 56

The hackers who attempted to hack Binance, one of the largest cryptocurrency exchanges on the Internet, have ended up losing money in a remarkable turn of events. It all began on Thursday, when thousands of user accounts started selling their Bitcoin and buying an altcoin named Viacoin (VIA). The incident, BleepingComputer reports, looked like a hack, and users reacted accordingly. But this wasn't a hack, or at least not your ordinary hack. The report adds: According to an incident report published by the Binance team, in preparation for yesterday's attack, the hackers ran a two-month phishing scheme to collect Binance user account credentials. Hackers used a homograph attack by registering a domain identical to, but spelled with Latin-lookalike Unicode characters. More particularly, hackers registered the [redacted].com domain -- notice the tiny dots under the "i" and "a" characters.

Phishing attacks started in early January, but the Binance team says it detected evidence that operations ramped up around February 22, when the campaign reached its peak. Binance tracked down this phishing campaign because the phishing pages would immediately redirect phished users to the real Binance login page. This left a forensic trail in referral logs that Binance developers detected. After getting access to several accounts, instead of using the login credentials to empty out wallets, hackers created "trading API keys" for each account. With the API keys in hand, hackers sprung their main attack yesterday. Crooks used the API keys to automate transactions that sold Bitcoin held in compromised Binance accounts and automatically bought Viacoin from 31 other Binance accounts that hackers created beforehand, and where they deposited Viacoin, ready to be bought. But hackers didn't know one thing -- Binance's secret weapon -- an internal risk management system that detected the abnormal amount of Bitcoin-Viacoin sale orders within the span of two minutes and blocked all transactions on the platform. Hackers tried to cash out the 31 Binance accounts, but by that point, Binance had blocked all withdrawals.


Qarnot Unveils a Cryptocurrency Heater For Your Home ( 65

Qarnot, the French startup known for using Ryzen Pro processors to heat homes and offices for free, is unveiling a new computing heater specifically made for cryptocurrency mining. "The QC1 is a heater for your home that features a passive computer inside," reports TechCrunch. "And this computer is optimized for mining." From the report: The QC1 features two AMD GPUs (Sapphire Nitro+ Radeon RX580 with 8GB of VRAM) and is designed to mine Ethers by default. You can set it up in a few minutes by plugging an Ethernet cable and putting your Ethereum wallet address in the mobile app. You'll then gradually receive ethers on this address -- Qarnot doesn't receive any coin, you keep 100 percent of your cryptocurrencies. If you believe Litecoin or another cryptocurrency is the future, you can also access the computer and mine another cryptocurrency. It's a Linux server and you can access it directly. If your home is cold and you desperately need to turn on the heaters, the QC1 is going to turn on the two GPUs and mine at a 60 MH/s speed. There are also traditional heating conductors in case those two GPUs are not enough. Qarnot heaters don't have any hard drive and rely on passive heating. You won't hear any fan buzzing in the background. You can order the QC1 for $3,600 starting today -- you can also pay in bitcoins. The company hopes to sell hundreds of QC1 in the next year.

Bitcoin Dives After SEC Says Crypto Platforms Must Be Registered ( 81

Bitcoin slumped after the U.S. Securities and Exchange Commission reiterated that many online trading platforms for digital assets should register with the agency as exchanges. From a report: The largest cryptocurrency dropped as much as 8.6 percent to $9,864 after the SEC statement boosted concern that tightening regulation may limit trading. [...] "If a platform offers trading of digital assets that are securities and operates as an 'exchange,' as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration," the SEC said in the statement Wednesday.

Some of the largest cryptocurrency trading platforms, like Coinbase's GDAX, aren't registered as a national exchange with the SEC, and instead have money transmission licenses with separate states. In the case of Gemini, it's regulated by the New York State Department of Financial Services as a trust company, according to its website.


Coinbase Announces Cryptocurrency-Focused Index Fund ( 26

In an interview with CNBC on its "Fast Money" segment, Coinbase's President and COO Asiff Hirji said the digital-currency platform would launch a cryptocurrency-focused index fund. Details are scarce but Hirji said it will be intended to give retail investors broad exposure to virtual currencies, and would be targeted to accredited investors on Day 1. He also said the index fund would be market-cap weighted.

UPDATE: Coinbase has since issued a blog post detailing the announcement. They are also introducing Coinbase Index, which "is a measure of the financial performance of all assets listed on GDAX, weighted by their market capitalization."

Silicon Valley Is Over, Says Silicon Valley ( 304

An anonymous reader shares a New York Times report: In recent months, a growing number of tech leaders have been flirting with the idea of leaving Silicon Valley. Some cite the exorbitant cost of living in San Francisco and its suburbs, where even a million-dollar salary can feel middle class. Others complain about local criticism of the tech industry and a left-wing echo chamber that stifles opposing views. And yet others feel that better innovation is happening elsewhere. "I'm a little over San Francisco," said Patrick McKenna, the founder of High Ridge Venture Partners who was also on the bus tour. "It's so expensive, it's so congested, and frankly, you also see opportunities in other places." Mr. McKenna, who owns a house in Miami in addition to his home in San Francisco, told me that his travels outside the Bay Area had opened his eyes to a world beyond the tech bubble. "Every single person in San Francisco is talking about the same things, whether it's 'I hate Trump' or 'I'm going to do blockchain and Bitcoin,'" he said. "It's the worst part of the social network."

[...] Complaints about Silicon Valley insularity are as old as the Valley itself. Jim Clark, the co-founder of Netscape, famously decamped for Florida during the first dot-com era, complaining about high taxes and expensive real estate. Steve Case, the founder of AOL, has pledged to invest mostly in start-ups outside the Bay Area, saying that "we've probably hit peak Silicon Valley." But even among those who enjoy living in the Bay Area, and can afford to do so comfortably, there's a feeling that success has gone to the tech industry's head. "Some of the engineers in the Valley have the biggest egos known to humankind," Mr. Khanna, the Silicon Valley congressman, said during a round-table discussion with officials in Youngstown.


Thieves Steal 600 Powerful Bitcoin-Mining Computers In Iceland ( 88

The Associated Press reports of a Bitcoin heist in Iceland where thieves stole some 600 computers used to "mine" bitcoin and other virtual currencies. "Some 11 people were arrested, including a security guard, in what Icelandic media have dubbed the 'Big Bitcoin Heist,'" reports the Associated Press. From the report: The powerful computers, which have not yet been found, are worth almost $2 million. But if the stolen equipment is used for its original purpose -- to create new bitcoins -- the thieves could turn a massive profit in an untraceable currency without ever selling the items. Three of four burglaries took place in December and a fourth took place in January, but authorities did not make the news public earlier in hopes of tracking down the thieves. Police tracking the stolen computers are monitoring electric consumption across the country in hopes the thieves will show their hand, according to an industry source who spoke on condition of anonymity because he is not allowed to speak to the media. Unusually high energy usage might reveal the whereabouts of the illegal bitcoin mine. Authorities this week called on local internet providers, electricians and storage space units to report any unusual requests for power.

Coinbase: We Will Send Data On 13,000 Users To IRS ( 133

Coinbase has formally notified its customers that it will be complying with a court order and handing over the user data for about 13,000 of its customers to the Internal Revenue Service. Ars Technica reports: The case began back in November 2016 when the IRS went to a federal judge in San Francisco to enforce an initial order that would have required the company to hand over the data of all users who transacted on the site between 2013 and 2015 as part of a tax evasion investigation. Coinbase resisted the IRS' request in court. But by November 2017, after a hearing, U.S. Magistrate Judge Jacqueline Scott Corley narrowed the request to only cover 13,000 particular individuals. The San Francisco-based startup is now required to provide "taxpayer ID, name, birth date, address, and historical transaction records for certain higher-transacting customers during the 2013-2015 period." Coinbase reminded its users that it is "unable to provide legal or tax advice." The company also noted, "If you have concerns about this, we encourage you to seek legal advice from an attorney promptly. Coinbase expects to produce the information covered by the court's order within 21 days."

'Satoshi' Craig Wright Is Being Sued For $10 Billion For Stealing His Partner's Bitcoin ( 92

Craig Wright, the nChain chief scientist who previously claimed to be the pseudonymous bitcoin creator Satoshi Nakamoto, is being sued for a whopping $10 billion for stealing $5 billion in bitcoin from a former business partner. CoinDesk reports: The lawsuit is being brought by Ira Kleiman on behalf of the estate of his brother, Dave, who has been linked to the earliest days of bitcoin. Kleiman, a forensic computer investigator and author, passed away in 2013 following a battle with MRSA. At the heart of the new lawsuit, according to a complaint filed in the U.S. District Court for the Southern District of Florida on Feb. 14, is an alleged hoard of more than 1.1 million bitcoins, which Ira Kleiman's lawyers say is worth in excess of $10 billion. He is being represented by Boies Schiller Flexner LLP.

Wright, court records show, has been accused of allegedly conducting "a scheme against Dave's estate to seize Dave's bitcoins and his rights to certain intellectual property associated with the Bitcoin technology." "As part of this plan, Craig forged a series of contracts that purported to transfer Dave's assets to Craig and/or companies controlled by him. Craig backdated these contracts and forged Dave's signature on them," attorneys for the plaintiff wrote. Included alongside the complaint are a number of additional filings, including the business registration for a firm called W&K Info Defense Research LLC, in which Kleiman and Wright were business partners. In addition to the roughly 1.1 million bitcoins, Ira Kleiman is also seeking compensation for the intellectual property his lawyers claim arose from the partnership between his deceased brother and Wright.

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