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Fool’s gold? Peter Schiff’s bank under investigation in tax evasion probe

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This morning, millionaire broker and noted Bitcoin skeptic Peter Schiff awoke to find his bank under renewed scrutiny due to an international criminal investigation. 

According to reporting from Australian newspaper The Age and The New York Times, the J5 — a joint task force of tax authorities from major Western governments convened in the wake of the bombshell publication of the Panama Papers — have placed “hundreds” of accounts at Schiff’s Puerto Rico-based Euro Pacific Bank under investigation for tax evasion and other financial crimes. 

The reports detail what appears to be a comically inept organization responsible for harboring the fortunes of a cast of shady businessmen and criminals. Employees hired after a quick Google search screening were tasked with attracting clients such as Simon Antequetil, the noted Australian fraudster and tax avoidance maestro.

In an interview with The Age last month, Schiff denied wrongdoing on the part of Euro Pacific, saying the bank “turns down far more accounts than we approve because our compliance is so rigorous”. 

He later stormed out of the interview.

But nestled amid the reports is a key detail which may shed some light on why Schiff has been such a virulent critic of the world’s most popular cryptocurrency, Bitcoin. 

From The Age:

“The bank’s security was also a problem […] at one point, Russians tried to extort the bank for a ransom of 1000 bitcoins, worth millions of dollars.”

While Schiff was criticizing Bitcoin as early as 2013, the attempted extortion scheme might explain why he’s been particularly vocal as of late, most notably in a Twitter spat with Gemini co-founder Tyler Winklevoss.

Schiff has also demonstrated a history of paranoia regarding hacks, especially cryptocurrency-related hacks. In July, Schiff augured that the hack of multiple Twitter accounts by an American teenager might be a “harbinger” for a Bitcoin hack, and in April he tweeted about “the potential for improvements in technology to hack the blockchain and counterfeit Bitcoin.”

Despite Schiff’s concerns over the potential hacking of the Bitcoin blockchain, there is no equivalent in the digital asset world to iron pyrite. Unless we count BSV.





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Coinbase CEO prompts furious accusations of hypocrisy as he pushes political misinformation

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Less than a month after Brian Armstrong declared Coinbase should “be laser focused on achieving its mission,” he seemingly violated his own policy by tweeting a political post riddled with falsehoods… during business hours. 

In an Oct. 23 tweet from Armstrong’s personal account, the Coinbase CEO posted a link to a blog written by Rob Rhinehart on Kanye West’s presidential run with the tagline “epic post.” 

Rhinehart’s Twitter account is no longer available for unknown reasons, although its absence may be related to the inaccuracies and outright falsehoods contained in the post — even if it were written as satire, as some have speculated. 

These lies include the claim that Democratic presidential candidate Joe Biden’s son “killed himself” — in fact Beau Biden died from brain cancer in 2015. Twitter previously locked the New York Post’s account for an article making unverified claims about Hunter Biden. 

The blog post, entitled “Why I am Voting for Kanye West,” also seemingly goes against Armstrong’s stance on expressing political views at the crypto firm. 

Do as I say, not as I do

In September, Armstrong wrote a controversial blog post claiming Coinbase’s mission did not include advocating “for any particular causes or candidates internally that are unrelated to our mission because it is a distraction from our mission.” 

“We won’t debate causes or political candidates internally that are unrelated to work,” stated Armstrong at the time. He added that Coinbase employees should not “expect the company to represent our personal beliefs externally.”

Members of the crypto community moved between accusing the Coinbase CEO of outright hypocrisy for making a political statement — at 12:12 PM PST on a business day, assuming Armstrong works similar hours to those of his employees.

“Calling this ‘epic’ shows very poor judgment,” said Josh Elman, a board member at venture capital group Greylock Partners. “It is filled with propaganda, false claims, and nonsense. 

Having trust in the judgment of our leaders (even if we don’t agree with their decisions) is important in a CEO as well as president. This undermines trust in you.”

Other users on Twitter assumed the post was deliberately misleading.

“That article has got to be satire, right? If not, it’s one of the most tone deaf, cruel, and grossly counterfactual load of tripe I’ve ever seen,” said Twitter user jray. “I’d honestly be quite embarrassed to work with/for someone who believed this.”

Ironically, the controversy surrounding Armstrong’s recent tweet is exactly what he said he hoped to avoid by making Coinbase an “apolitical culture.” 

“There is a blurry line between moral statements and politics. We could use our work day debating what to do about various unrelated challenges in the world, but that would not be in service of the company or our own interests as employees and shareholders.”

Sixty Coinbase employees, or roughly 5% of its staff, reportedly left the crypto firm following the September announcement. Armstrong claimed in an Oct. 1 meeting that a “silent majority” of employees sided with him on keeping politics out of Coinbase. However, some who stayed have allegedly felt their freedom of speech has been stifled, with staff being required to erase certain politically-themed correspondence posted internally on the Slack messaging platform. There is no constitutionally mandated right to free speech within private companies, however. 

“If your original ‘no politics at work’ rule hasn’t driven out smart folks from your company, describing this rambling idiocy as ‘epic’ certainly will,” said Twitter user Gleb Bahmutov.





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Commodity trading gets sweeter with blockchain-based sugar exchange

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The world’s largest sugar refinery, Al Khaleej Sugar, officially announced the application of blockchain technology in its recently launched sugar trading platform, DigitalSugar.io.

Users of the UAE-based platform will trade the spot price of sugar via tokens tied to “up to 100,000 tonnes of raw sugar,” with its peg assured by the Universa blockchain who will be issuing electronic warrants of ownership with the tokens. Traders will be able to hold tokens representing between 1 kg to 1M tonnes, and will pay .4% in exchange fees as well as a 2.5% yearly storage fee.

The platform, launched in partnership with the flagship Free Zone and Government of Dubai Authority on commodities trade (DMCC) and Universa Blockchain, will be the first global exchange to offer traders and investors raw spot sugar trades on an immediate basis, rather than the more common options or futures offered by other current exchanges.

Jamal Al Ghurair, Managing Director, Al Khaleej Sugar, said that the launch of a blockchain-based sugar trading platform is in line with the wider goals of UAE Blockchain Strategy 2021, which Highness Sheikh Mohammed bin Rashid, Vice President and Prime Minister of the UAE and Ruler of Dubai, launched in 2018.

The Emirate Blockchain Strategy 2021 outlines an ambitious plan to migrate at least 50% of government-related transactions onto distributed ledger technology (DLT) platforms before the end of this year.

Sheikh Mohammed said of the Strategy: 

“The adoption of this technology will reflect on the quality of life in the UAE and will enhance happiness levels for citizens. 50 percent of government transactions on the federal level will be conducted using Blockchain technology by 2021 … This technology will save time, effort, and resources and enable individuals to conduct most of their transactions in a timely manner that suits their lifestyle and work.”



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Morpher Labs attempts to crack knotty prediction market problems

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On August 31, 2020, Morpher Labs announced the launch of its flagship Ethereum-based contract trading and prediction market platform, Morpher, with the stated goal of providing users unlimited access to long-and-short trades of real-world stocks, commodities, and FOREX markets. 

The technical obstructions of such a goal, however, have historically proven tricky to navigate. 

In a recent interview with Cointelegraph, Morpher Labs CEO Martin Forehler explained that Morpher’s vision is to allow worldwide access to asset classes that normally have multiple barriers in the form of geographical restrictions, middlemen, and steep fees. 

“The goal of the platform is to enable anyone living on Earth to trade assets 24/7, featuring minimized fees and without needing a counterparty,” said Forehler.

Many projects harbor similar ambitions, but have been hampered by the seemingly intractable problem that arises whenever projects try to offer on-chain users access to real-world assets and their price action: liquidity.

Synthetix, for instance, allows users to mint synthetic assets that track the price of real-world assets such as gold or the Nikkei stock index. However, their platform requires users to hold a quantity of SNX tokens at a 600% ratio to the value of their synthetic asset portfolio in order to mint new synthetics or withdraw their funds. 

Similarly, prediction market Augur allows users to bet on the outcome of real-world events — say, if the price of a specific asset exceeds a certain threshold within a specified date — but the protocol has never managed to crack $3 million in TVL, according to DeFi Pulse. 

In these instances, liquidity either comes in the form of a heavily-collateralized chicken, or as an egg that never hatches.

Morpher, meanwhile, is attempting to tackle the liquidity problem with a token-economic solution. 

“The [Morpher] smart contract creates or destroys MPH token depending on the outcome of [a] bet,” explains Forehler. “E.g. a 100 MPH token bet on Apple becomes 110 MPH if Apple gains 10%, or 90 MPH if Apple loses 10%.” 

This peer-to-contract system hypothetically allows for unlimited liquidity, as any user can enter and exit a MPH-denominated bet of any size. 

However, Hristo Piyankov, a token economy expert and Chief Data Officer at REINNO, cautions that this model may lead to situations where liquidity dries up for MPH holders. 

“To give an example,” Piyankov explained to Cointelegraph, “If currently 1 MPH is traded for 0.015 DAI and then all of a sudden the total supply of MPH doubles (because a tracked underlying asset doubled in value), would it be possible to sell all those newly minted MPH for 0.015 DAI each (the definition of liquidity), or would this drive the price of MPH down (suggesting that the token is illiquid vs other well-established currencies)?”

When asked about this dynamic, Forehler contends that such value fluctuations occur in real-world markets as well, though with less extremes.

“If the average user has a return of say five percent per year, there are five percent more MPH token that year. Assuming a constant market capitalization, only users with returns greater than five percent make a profit, while everyone with lower returns has a loss,” he says. 

“This may seem odd at first, but it just replicates what happens on traditional markets. Traders who do not outperform the inflation rate lose, even if their nominal returns were positive,” he added.

Thus far, the results of Morpher’s model have been mixed. According to Forehler, in the nearly two months since launch Morpher has attracted 28 thousand users. The Morpher Twitter account, however, has reported numerous withdrawal outages. 

While it remains to be seen if Morpher will be able to solve the problems faced by prediction markets, Forehler remains a zealot for the end mission: to provide global access to real world assets without middlemen:

“We are convinced that the full potential of the Morpher Protocol will only unfold once it is universally accessible, and we are working hard on making that happen.”



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