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After Recent Scandals, the Crypto Exchange Markets are Shifting

After Recent Scandals, the Crypto Exchange Markets are Shifting

In a market that has grown at a breakneck pace over recent years, crypto exchanges have been through their fair share of issues. From exit scams to hacks to allegations of market manipulation - the list goes on. However, seismic events have shaken the crypto markets over the last month to the extent that we’re now seeing a shifting landscape across the exchange markets. 

On September 26, KuCoin confirmed via its blog and Twitter account that it “had detected some large withdrawals.” After the discovery that the exchange had been subjected to the third-biggest attack in crypto history. The thieves took a total of $281 million in Bitcoin, Ethereum, and various ERC-20 and TRC-20 tokens. 

Since the incident, KuCoin has been working with the projects that listed its tokens to reinstate them to their rightful owners through token swaps and other means. KuCoin representatives have remained tight-lipped about the incident, only stating that they have identified suspects, and the matter is now in the hands of law enforcement. 

Elsewhere, exchange giant OKEx suddenly announced on October 16 that it was halting all withdrawals, amid a swirl of rumors. The announcement confirmed that “one of our private key holders is currently cooperating with a public security bureau in investigations where required” and implying that the exchange couldn’t access its own wallets in the absence of one individual. It later emerged that the individual in question is Star Xu. The price of OKEx’s token, OKB, fell by nearly 30% following the news. 

Source: Coinmarketcap

At the time of writing, OKEx has reinstated some functionality. However, users are still unable to withdraw their holdings. 

Derivatives Traders Vote with Their Feet

The derivatives markets also took a blow in recent weeks. For the past year, the US Commodities and Futures Trading Commission has been investigating BitMEX for offering unregulated trading to American users. 

On October 1, the Department of Justice confirmed it was bringing criminal charges against the exchange’s three co-founders along with one senior executive. They stand accused of “willfully failing to implement and maintain even basic anti-money laundering policies.” 

It was the culmination of a challenging year for the Seychelles-based firm, which had struggled to recover open interest levels following March’s “Black Friday.” As the price of Bitcoin fell rapidly, BitMEX went offline, meaning traders couldn’t exit their positions and were force-liquidated. 

Open interest in Bitcoin futures plummeted rapidly across the board, but in general, it has recovered well along with the price of BTC. However, BitMEX has suffered. In March, it had over $1.5 billion in Bitcoin futures open interest. By mid-October, this was hovering around the $600 million mark. 

Source: Skew.com

Rival Exchanges Step Up

So, if the overall levels of open interest in Bitcoin futures have remained buoyant, where are traders going? The exodus from BitMEX has provided a significant opportunity for its rivals to gain a more prominent place on the market. 

Singapore-based Bybit is one obvious winner. The exchange launched in 2018 and has grown to accrue over one million registered users. This year, it has launched several new products, including new perpetual contracts offering exposure to altcoins such as XTZ (Tezos) and LINK (Chainlink.) It’s also started offering mutual insurance to help traders offset the impact of losses while avoiding the complexity of hedging instruments like options. 

However, it’s perhaps in the area of trust and transparency that Bybit is managing to differentiate itself against previous market leader BitMEX. The latter has been plagued by allegations from the crypto community about using its in-house trading desk to profit from traders and “weaponizing” its server issues as a means of increasing its insurance fund. 

In contrast, Bybit lives up to its values as a customer-centric platform. It operates a matching engine that can handle 100,000 transactions per second, along with a state-of-the-art pricing system to avoid manipulation. 

Furthermore, Bybit founder Ben Zhou has spoken out about the industry's security issues, explaining how his company invests in security by working with reputable firms on audits and implementing zero-trust architecture. Such a rigid approach to security ensures that ByBit has never been hacked since it launched over two and a half years ago. 

Outpacing the Competition

It’s this customer-centric approach, along with optimal market conditions, that has led to Bybit being able to 4x its open interest in Bitcoin futures in 2020. It increased from $150 million in January to over $600 million in October - outpacing BitMEX for the first time

Source: Skew.com

If further proof were needed that BitMEX is losing out to its newer rivals, then FTX is another example. Open interest in Bitcoin futures on FTX increased from around $75 million in January to $330 million in October. 

Source: Skew.com

However, unlike Bybit, which is focused on the perpetual swap market, FTX has made its name with new products such as leveraged tokens. Therefore, Bybit is perhaps a more natural fit for traders looking for an alternative to BitMEX, which is reflected in its higher open interest. 

With user trust in KuCoin, OKEx, and BitMEX declining, it seems evident that traders and investors will continue to look for more reliable alternatives. Crypto exchange operators would do well to learn from these mistakes and step up to demonstrate their credentials in terms of security, reliability, and customer focus. In doing so, they have an opportunity to capture market share from the competition. 

© 2020 CryptoDaily All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Coinbase co-founder, Fred Ehrsam set to join Fireblocks as a member of the board

Coinbase co-founder, Fred Ehrsam set to join Fireblocks as a member of the board

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1 minute read

  • Fred Ehrsam, the co-founder of the crypto platform known as Coinbase is getting ready to join the digital asset security platform Fireblocks. 
  • It was announced last week that Fred would be joining the board following a recent round of funding.

Fred Ehrsam, the co-founder of the crypto platform known as Coinbase is getting ready to join the digital asset security platform Fireblocks. It was announced last week that Fred would be joining the board following a recent round of funding.

The co-founder of the well-known crypto platform is getting ready to join the company as a board member following a $30 million funding ground to help expand its operations on an international level.

Throughout 2020, Fireblocks has launched a secure asset transfer network which would allow more institutions to efficiently transfer assets on chain. And on top of this, the platform also announced that it has seen more than $150 billion in transferred assets over the course of the past year. Fred has said:

“Fireblocks has become the go-to for any business looking to build new digital asset operations or scale existing ones… The extraordinary growth of the Fireblocks Network and its team in the last year attests to the enormous value they have unlocked for enterprise and institutional customers.”

 

For more news on this and other crypto updates, keep it with CryptoDaily!

© 2020 CryptoDaily All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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North Carolina residents to soon have access to Binance.US services

North Carolina residents to soon have access to Binance.US services

Quick take

1 minute read

  • Binance.US is getting ready to launch its services available to North Carolina residence. 
  • Binance published a statement earlier this month Catherine Coley saying that the digital asset marketplace is now available for residents in North Carolina.

Binance.US is getting ready to launch its services available to North Carolina residents. The subsidiary of the major crypto platform Binance published a statement earlier this month on the 12th of November to CT with the CEO, Catherine Coley saying that the digital asset marketplace is now available for residents in North Carolina.

This would allow them to buy, trade and earn cryptocurrency.

“[North Carolina] is a state that has been involved in building the banking industry and evolving technology,” stated Coley.

It is also worth noting that North Carolina is home to the research triangle park. For those that don’t know, this is a well-known high tech research and development company that includes Cisco systems as well as other consulting companies in relation to blockchain.

In regards to this, they further say:

“Research Triangle Park and the robust school systems in the state have it positioned to meaningfully impact the blockchain industry [...] the state can begin to build more companies that have easy access now to cryptocurrencies.”

For more news on this and other crypto updates, keep it with CryptoDaily!

© 2020 CryptoDaily All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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IRS crackdown on Coinbase users who are dodging their tax

IRS crackdown on Coinbase users who are dodging their tax

Quick take

1 minute read

  • The tax office of David W Klasing has just issued a public release morning the United State IRS is cracking down seriously with users on the Coinbase platform.
  • The dual licensed tax lawyers employed at the company say that they have been tracking an increase in IRS enforcement activity against users on the platform you are not complying with their requirements for tax and reports.

A specialised Californian tax company, the tax office of David W Klasing has recently issued a public release stating the United States internal revenue service (IRS) is cracking down seriously with users on the Coinbase platform.

The dual-licensed tax lawyers employed at the company say that they have been tracking an increase in IRS enforcement activity against users on the platform who are not complying with their requirements for tax and reports.

The company has heeded a warning saying people who are not paying the tax on the platform “end up facing serious civil and criminal trouble down the line”. They further say:

“If you have failed to report holding Bitcoin or other virtual currencies on your past returns or filed an incomplete or misleading picture of your cryptocurrency holdings, the time to act to correct this is now. Once an audit or criminal tax investigation has begun, it will be too late to amend your returns or take advantage of a voluntary disclosure program.”

A transparency report was released by the exchange earlier this year in October which was highlighted by the law company saying that it should “serve as a major wake-up call“ to users of the exchange.

For those that don’t know, this report clearly indicated that both the IRS and its criminal investigation unit were filing information requests with the platform.

The uptick in the enforcement activity against Coinbase uses from the IRS on those who don’t their taxes would appear to confirm that the exchange is cooperating closely with federal authorities in the United States as the company has further said:

“This data [in the October report] makes it clear that the IRS is requesting information from Coinbase for the express purpose of checking it against its own taxpayer data and looking for discrepancies where holdings on Coinbase have not been reported on taxpayers’ returns.”



For more news on this and other crypto updates, keep it with CryptoDaily!

© 2020 CryptoDaily All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Crypto exchanges boom in Cuba during the pandemic

Crypto exchanges boom in Cuba during the pandemic

Quick take

1 minute read

  • Cryptocurrency has been going at an immense rate over the course of 2020. 
  • With the coronavirus pandemic in full swing and the economic crisis that came as a result still ongoing, crypto is looking as a tasty alternative for mini all over the world.

Cryptocurrency has been going at an immense rate over the course of 2020. With the coronavirus pandemic in full swing and the economic crisis that came as a result still ongoing, crypto is looking as a tasty alternative for many all over the world.

Cuba is one such country that has been seeing a spike in its crypto activities over the course of this year. This comes as there is an absence of related regulation in the country according to senior executives at local crypto companies.

Earlier this month, the nation recorded a massive spike in Google queries relating to bitcoin which suggested an increase in crypto activity in the nation.

Speaking to CT, a local crypto exchange Bitremesas said that the platform has been slowly but surely growing over the course of this year and has seen a noticeable influx in its user activity in recent times. The creator of the exchange, Erich Garcia said “By now, the use of the service is increasing at 200% every month.” 

Mario Mazzola, another founder of a different local exchange known as Qbita, said:

“Bitcoin usage and volume in Cuba is exploding right now.”

Cryptocurrency regulations in Cuba are next to none. They are completely deregulated according to local enthusiasts. Some say that they are neither legal nor illegal but the government in Cuba has favourably looked to the industry in the past.

For more news on this and other crypto updates, keep it with CryptoDaily!

© 2020 CryptoDaily All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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