U.S. Marshals Hold Third Bitcoin Auction

The U.S. Marshals Service is holding its third Dread Pirate Roberts (DPR) bitcoin auction this March 5^th, 2015. These bitcoin were seized from Ross Ulbricht, allegedly the Dread Pirate Roberts, in relation to the Silk Road prosecution, an online black market bust primarily related to the sale of illegal drugs.

At auction are 50,000 bitcoin separated into two series. The first (series A) will consist of ten blocks of 2,000 bitcoin each, requiring a deposit of $100,000. The second series (B) will consist of ten blocks of 3,000 bitcoin each, requiring a deposit of $150,000.

Not all of the coin at auction were necessarily involved in some form of illegal transaction. There were some legitimate merchants who sold perfectly legal goods through the Silk Road platform.

Like the previous two auctions, the current one is blind, meaning that bidders will not know the value of the other bids. The first auction was held last summer for just under 30,000 bitcoin, in nine blocks of 3,000 and a partial tenth block. Participants had to deposit a minimum of $200,000 to take part.

Tim Draper won all the blocks up for sale in the first auction.

He also claimed 2,000 bitcoin from the second auction of 50,000 bitcoin that was held in early December, 2014. The remaining 48,000 bitcoin (19 of 20 blocks) were won by syndicate bidders led by SecondMarket and the Bitcoin Investment Trust (BIT).

The second, most recent auction had 11 registered bidders and 27 resulting bids.

Parties interested in the upcoming third auction should be aware that the bidder registration has opened from February 17^th, but will close at 12:00 EST on Monday, March 2^nd, 2015.

Deposits for the auction must originate from a bank located within the United States, and bidders must confirm that they have no association with Ross Ulbricht.

Registration consists of the deposit along with a manually signed pdf copy of the registration form, a copy of a government issued photo ID (of the bidder or control person) and a copy of the wire transfer receipt.

The auction starts at 08:00 EST on March 5^th and will last until 14:00 EST the same day.

For more information about the auction, visit the U.S. Marshals site here.

February 21, 2015 at 12:51AM

Read More

Bitcoin Wallet Maker WoodWallets to Sell Business

The owners of WoodWallets.io, the makers of handcrafted, wood-carved bitcoin wallets, have announced that the business has suspended operations and is up for sale.

The full post stressed that the owners were stepping away from the business due to unspecified personal reasons, and that they were unable to approach WoodWallets with the “same level of passion and dedication”.

The post recalls the origins of the project, which began one year ago after owner Nico issued a post on Reddit, before detailing how the owners want to move forward with the sale.

Nico writes:

”We would be more than happy to leave everything we built so far in the hands of a company or an individual who is capable of running it with the same level of passion – possibly even more – that we kept during this year.”

Nico went on to speculate that the alternative would be to allow the project to become another “boring online shop”, one that would lack the community spirit that he contends led to the sale of hundreds of Woodwallets.

CoinDesk received a specialty version of the Woodwallet this summer, at the time noting its careful and artful packaging, and elegant design.

The post concluded: “Whatever happens now, we will keep a good memory.”

Images via Woodwallets.io

Wallet

February 20, 2015 at 10:40PM

Read More

Airbitz Enables BLE-driven Wireless Payments for iPhone and Android

If you’ve ever used bitcoin currency, you know that it can be frustrating to try to send and receive money when QR codes aren’t cooperating.

Solar reflection, phones with cracked screens, and poorly focusing cameras are among the issues that are hampering widespread use of QR codes and impeding Bitcoin adoption.

Developers at Airbitz, a Bitcoin wallet and business directory, have found a solution.

In October of 2014, Airbitz unveiled technology that allowed for iPhone users in close proximity to pay each other wirelessly via Bluetooth technology on their app– all without the need to pair iPhones. No more QR codes.

This is made possible by Bluetooth Low Energy (BLE).

When compared to Classic Bluetooth, the newer BLE uses less power and lowers costs while providing a similar communication range.

But not everyone uses iPhones.

The latest android software update (Android 5.0), however, has BLE capabilities. As a result, Airbitz has recently launched wireless Bitcoin payments for Android. The Airbitz protocol is compatible between iPhone and Android devices.

The idea for wireless Bitcoin payments emerged out of dissatisfaction with the QR code method of transacting with Bitcoin.

Paul Puey, CEO of Airbitz, explained:

“The idea came about after many frustrating experiences with QR codes, and the realization that most people are not familiar with them and their scary appearance. The advance of Bluetooth Low Energy (BLE), which can work without pairing, gave us the motivation to develop this feature and protocol.”

“Android was far more difficult to implement than iPhone,” adds Paul. “Our usage of BLE requires a mode called Peripheral Mode, which allows a device to behave like a beacon, broadcasting info to receiving devices. iPhone has had this capability since the iPhone 4S, allowing it to both broadcast and receive BLE payment requests. Android only introduced this Bluetooth feature (Peripheral Mode) as of version 5.0 (Android Lollipop). We developed the early beta versions of 5.0 with the expectation that old devices would support this feature. Before release, at the last minute, Google disabled Peripheral Mode for all devices except Nexus 6 & 9. Although a bit crippled by Google, the Airbitz wallet allows full send and receive via Bluetooth on Nexus 6 & 9, but only sending capabilities on most Android 4.3 devices and higher.”

Ultimately, this initiative is a move toward making Bitcoin user-friendly, something that the cryptocurrency will need if it hopes to thrive.

“Our focus,” concludes Paul, ” is to deliver software with an amazing user experience, both visually and functionally, simplifying this advanced technology and delivering it to the masses while still retaining Bitcoin’s core principles of decentralization and privacy.”

This important innovation can potentially make the process of adopting Bitcoin less like pulling out molars, and more like learning how to tweet.

Check out Airbitz’s website here.

February 20, 2015 at 04:44PM

Read More

Fedcoin Rising

The idea of a government-sponsored digital currency has been around for quite some time. See, for example, the unconfirmed rumors reported in a March, 2013 discussion on the Bitcointalk forum titled “Fedcoin: A centrally-issued alternative to peer-to-peer currencies .”

Now U.S. economists are taking it seriously.

On February 3, David Andolfatto , Vice President of the Federal Reserve Bank of St. Louis, wrote a blog post based on a presentation he gave at the International Workshop on P2P Financial Systems 2015. The title of the blog post is “Fedcoin: On the Desirability of a Government Cryptocurrency .”

Andolfatto’s central thesis is that the government could solve the problems of digital economies as follows:

“Imagine that the Fed, as the core developer, makes available an open-source Bitcoin-like protocol (suitably modified) called Fedcoin. The key point is this: the Fed is in the unique position to credibly fix the exchange rate between Fedcoin and the USD. [Consumers and businesses] will have all the benefits of Bitcoin – low cost, P2P transactions to anyone in the world with the appropriate wallet software and access to the internet. [I]n short, Fedcoin is essentially just like digital cash. Except in one important respect. Physical cash is still a superior technology for those who demand anonymity.”

Finextra blogger Tom Hay notes that Fedcoin contradicts the radical ideology of those Bitcoin enthusiasts who want a fully P2P economy not centrally controlled by the state. But from a government perspective it’s an interesting idea, because it links the stability of fiat currency to the speed and convenience of the Bitcoin technical platform. He adds:

“Ecuador has already launched a government-backed digital currency pegged to the U.S. dollar. [T]he Ecuadorian system is not based on the blockchain, and indeed Ecuador has banned Bitcoin and altcoins, but the Philippines are considering issuing a blockchain-based e-peso. The idea of digital fiat currency clearly has legs.”

So is the rise of FedCoin inevitable?

The film “The Rise and Rise of Bitcoin ” is a fascinating recap of the rebellious history of Bitcoin since its inception in 2009 all the way to the Mt. Gox fall and the arrest of Charlie Shrem in early 2014. The film tells a typical Internet story of idealistic hackers who want to change the world and their unstoppable rise… until the big boys take notice.

Those old enough to remember their “Internet moment” of enthusiastic awe for the newborn Internet in the early 90s – yes, it will change the world so fast – remember also the rest of the story: from a plaything of geeks and techno-libertarian anonymous dreamers (a famous 1993 New Yorker cartoon observed that “On the Internet, nobody knows you’re a dog ”), the Internet quickly became a tool of Big Capital and Big Government.

Today, old-timers use Facebook like everyone else, but know that everything we say and do online is monitored by governments and businesses all the time. We know that, short of taking pro-level privacy measures, there is no way to escape online surveillance. Today the Internet, like it or not, belongs to the establishment.

Perhaps it’s naïve to think that exactly the same thing won’t happen to Bitcoin.

The main appeal of Bitcoin for the original Libertarian and anarchist enthusiasts was the possibility of anonymous and untraceable transactions. But bitcoin transactions are traceable by-design to a bitcoin address, and anonymous only if the bitcoin address can’t be traced back to a physical person.

In practice, bitcoin transactions are easily traceable to their originators, and that’s one of the reasons governments will warm up to digital currencies. Forget using Bitcoin to escape taxes – in a state-controlled digital economy, the tax man will be able to find all your income and expenses in the blockchain.

Bitcoin transactions are faster and cheaper than traditional transactions, which is an important incentive not only for end users but for government agencies as well, as shown by the recent Bitcoin bills in Utah, New Hampshire and New York City. It seems likely that governments will try to appropriate selected aspects of digital currencies, and eliminate undesired aspects such as anonymity and volatility, to create efficient and cost-effective but fully regulated digital economies.

February 18, 2015 at 08:21PM

Read More

US Marshals to Auction 50,000 Bitcoins in March

The US Marshals service has announced it will auction off 50,000 BTC, worth 11.85m at press time, to the public on 5th March.

The auction will take place from 8:00 EST to 14:00 EST, with bids being accepted only by pre-registered participants. Bidders must complete the registration process by 2nd March to be eligible, while winning bidders will be notified 6th March.

As in previous auctions, the 50,000 BTC will be split into smaller auction blocks. This time 20 in total will be auctioned, with 10 blocks of 2,000 BTC and 10 blocks of 3,000 BTC for sale.

The federal agency, which manages assets seized during criminal investigations, obtained the coins from original owner Ross Ulbricht, who was recently convicted of running the online black market Silk Road and now awaits sentencing.

The news follows statements to CoinDesk in January that indicated the agency would plan to move forward with another bitcoin auction in the first quarter of 2015.

Image via Wikipedia

AuctionsRoss UlbrichtSilk RoadUS Marshals Service

February 18, 2015 at 05:45PM

Read More

Look out NASDAQ, Here Comes the Winklevoss Gemini Exchange

“Gemini” means twins in Latin, and it’s also the name of the new Bitcoin exchange created by super-entrepreneurs and venture capitalists Cameron and Tyler Winklevoss. After its public launch in the spring, the New York -based Gemini exchange, announced in January on the Winklevoss Capital website, will be a fully regulated Bitcoin exchange built on rock-solid compliance and backed by the U.S. regulatory and banking infrastructure. The Winklevoss twins discussed their plans in an interview with Vice News.

Last month, investors including three of the world’s most respected financial institutions – The New York Stock Exchange (NYSE), a subsidiary of USAA, and BBVA Ventures – invested $75 million in the Bitcoin service provider Coinbase, bringing its total capital to $106 million. According to Coinbase, that was the first time financial institutions made a major investment in a Bitcoin company. Besides buying and selling Bitcoin, the Coinbase Exchange allows customers worldwide to hold and use US dollars. Therefore, as noted by David Bailey in a recent Bitcoin Magazine article, Coinbase can be considered as the first global bank, and “the AOL of Bitcoin.”

Not so fast, say the Winklevoss twins. In their opinion, Coinbase launched their exchange before completing the necessary regulatory homework. Vice News reports that regulators in New York and California haven’t yet issued all the applicable licenses. Mark Williams, a finance professor at Boston University, believes that Coinbase’s attempt to start business without all the required licenses was very risky. According to him, building trust with regulators is key to Bitcoin’s future.

The Winklevoss twins believe that the main selling point of Gemini will be its strict compliance with all applicable regulations and its firm base in the US banking system – a major U.S. bank is involved, and no money will cross borders.

According to a statement issued by the twins: “[I]t’s a U.S. home for people, where they don’t have to wire their money overseas, where their money can actually stay in America, where they can buy and sell bitcoin from a company that’s regulated and has consumer protections. We see this as really critical infrastructure to building bitcoin and realizing its potential. [W]e’ve had open dialogue with regulators for almost a year now and we feel that we’re close and we want to make sure that we truly [are] licensed, that’s one of our principles. We don’t want to half bake it, or hack our way through and be on the fringe of it, we really want to do this the right way and get the blessing of the regulators. And we do feel that that’s around the corner.”

An interesting issue raised by the Vice News article is the “sell-out” of Bitcoin, which apparently is taking distance from its cypherpunk roots in underground crypto-anarchist circles and embracing Big Capital and Big Government. Is the mainstreaming of Bitcoin is inevitable and necessary for its adoption by the masses? Some say the nature of the Bitcoin protocol makes it impossible to completely eliminate its potential for anonymous and untraceable transactions. Is that is the case, even in a Bitcoin economy that becomes more and more mainstream and regulated, there will always be underground pockets of unconstrained use.

In addition to Gemini, the Winklevosses are planning a Bitcoin Exchange Traded Fund (ETF), the Winklevoss Bitcoin Trust ETF, which will be available to all investors on NASDAQ with the ticker COIN. The launch date is unknown, but the twins told Inside Bitcoins that everything is proceeding according to plan.

They added: “For those who are up for that and want to actually buy and sell bitcoin the asset, they can do so at Gemini.com. For those that just want bitcoin asset exposure or those, like institutions, pension plans, 401(k)s, etc., that cannot invest in bitcoin themselves, their only avenue to gain bitcoin exposure will be through a structure like an ETF where they are purchasing a security and not the underlying asset itself.”

According to the SEC filing, the value of COIN shares will reflect the dollar exchange rate of Bitcoin on Winkdex. That will be an interesting option for those traditional investors who are persuaded that the dollar exchange rate of Bitcoin will rise in the mid- and long term, but prefer not to hold Bitcoin.

Images via Gemini.

February 17, 2015 at 06:01PM

Read More

The AOL of Bitcoin Has Arrived: Coinbase Launches First True Global Bank

The internet was a vague idea for most people, before AOL arrived and gave the world a usable, daily internet access tool. The recent launch of Coinbase Exchange will change Bitcoin no less spectacularly. If you need further evidence, compare the early user growth rates of AOL with those of Coinbase. Coinbase adoption rates are significantly outpacing those that AOL made history with back in the early 1990s.

Here’s how and why.

Since Bitcoin growth rates seem to be stagnating compared to their 2013-2014 highs, most of us are accustomed now to leadership and innovation in the industry coming from the heavily venture-backed companies. From the standpoint of a VC, the space has matured over the past year from a field of slim pickings to one filled with heavyweights such as Coinbase, BitPay, Circle, BitGo, ChangeTip, BitFury, Chain, BitNet, OkCoin, Blockchain and many more. Amazing teams, amazing businesses, incredible growth trajectory and promise. If you haven’t been watching closely, you may have missed this transformation.

The recent news of Coinbase’s $75 million series C and the fruit of their labor, the Coinbase Exchange, was well publicized. However, few took note of the company’s rollout of fiat-backed accounts. On a pragmatic level, this means you can now sell your bitcoin and hold local currency with Coinbase. Individually these announcements are exciting, but in unison they represent a game changer. Bitcoin, beyond its philosophical or technological promise, has finally gained legal utility.

Let me lay this out for you in more detail.

Coinbase just used its Bitcoin foundation to become the world’s first global bank. Let that sink in. Sure, there are international banks, but operationally these banks function more as group of allied national banks who share a brand. That is not the same thing as a global bank. A customer in Greece, for example, who opens an account with Coinbase, is now doing business directly with a U.S.-based “bank.”

Thanks to Coinbase’s $75 million funding round provided by the NYSE, large U.S. banks, a multinational telecom company and a roster of finance VIPs, you can now open an account in a country such as Poland or Greece, fund your account via bitcoin or wire, and hold your money in U.S. dollars in the comparatively stable U.S.A. Your money is now completely insulated from your local currency issues, but spends the same as euros in your local bank account. This is the best of both worlds: all the functionality of your existing bank (and more), without the associated risks and fees. In addition to the banking services, Coinbase has just created the easiest, cheapest, least corrupt and most secure way to buy dollars. I imagine we’ll see an increasing number of local currencies you can hold in your account, too.

This week has seen an additional series of important announcements from Coinbase. On February 10, the company announced that it has expanded its bitcoin buy-and-sell functionality to five additional countries: the Czech Republic, Hungary, Bulgaria, Norway and Croatia. This brings the total number of countries where Coinbase’s buy-and-sell features are available to 24, with its wallet functionality available in 166 others.

All Coinbase needs now is a debit card and they could complete the circle. What if Coinbase gets shut down locally? If they were smart, they’d shut down operations in that country and refund everyone their deposits in bitcoin. Let the customer unload it locally at a small discount. The result: risk-free dollars. Funded by the NYSE. And INSURED.

If you are an exchange, it is imperative that you start taking notes and start moving fast. Coinbase has created the world’s first truly global bank, with features and low fees that a legacy bank is technically incapable of offering, unless they use Bitcoin.

Congratulations are in order for Coinbase. This was no easy feat. But surely now, other financial institutions have taken note of BBVA and USAA involvement, and will be looking for their own play in the space. As soon as Coinbase turns on the marketing engine that brands it as a gateway for USD, Coinbase use will surge internationally and, by its nature, introduce those users to the world of Bitcoin. Consumers have a use case, businesses have a use case, and the best-performing venture investors are salivating. Now it’s just a race to the first 10 million users.

February 13, 2015 at 08:37PM

Read More

Bitcoin Trending Issues Explored at First Satoshi Roundtable

by Ellen Sullivan on February 12, 2015 { }

There was no holding back on opinion, speculation or creativity at the first annual Satoshi Roundtable, an invitation-only gathering of 50 Bitcoin entrepreneurs at Punta Cana, Dominican Republic, February 6-8, 2015. According to attendees, the private, limited-attendance nature of the event created a venue for open discussion and commentary.

According to Bruce Fenton of the Bitcoin Association and Atlantic Financial, who organized the event with Anthony Di Iorio of Ethereum, many CEOs hold back on their commentary in public for fear of drawing the attention and ire of regulators, the media or competitors. To establish an atmosphere that would allow participants to freely explore current issues, problems and opportunities in Bitcoin, the event organizers elected to keep the event small and private.

The event’s website list of confirmed attendees included notable Bitcoin CEOs, entrepreneurs and early adopters such as Rodger Ver, Erik Voorhees, Charlie Lee, Vitalik Buterin and Nic Cary.

Hints are now being released of trending issues and prognostications that surfaced after two days of sessions:

• Mining Hardware Sales Down – A tectonic shift in the economics of mining has led to a downturn in hardware sales, with one manufacturer reporting a 95 percent drop.


• Multisig – Industry experts predict that 2015 will be the year of mass adoptions for multisig wallets among consumers and businesses. If your product does not have multisig capabilities, it is behind the curve of progress for security measures.


• Mining Fees Gaining Prominence – Fees will become more prevalent as a critical component of the economic feasibility of mining, especially as the next halving approaches in early 2016.


• Bitcoin ATMs – Given the high hardware costs and overhead of operation, we will probably see these first coming into play under the umbrellas of the larger Bitcoin brand names who have the ability to amortize the expense.


• Mining End Cost Profile Shrinking – Conference attendees concluded that to be profitable, a mining enterprise now must operate with total end costs of less than nine cents per kilowatt hour. Forecast: less efficient miners fade away while the highly efficient and those with cheap power thrive.

For the most part, the conference was very informal, with many casual conversations and much information shared about the health and growth of individual entrepreneur’s businesses. Bitcoin Magazine will continue to release news and information from the conference as it becomes available.

Images via satoshiroundable.org

February 12, 2015 at 06:53PM

Read More

Survey: 8% of US Retailers Plan to Accept Bitcoin in the Next Year

An online survey has found that 8% of US retailers say they are planning to accept bitcoin within the next 12 months.

The data, collected by the Boston Retail Partners, after surveying 500 retailers across the US, showed that none of the businesses were currently accepting bitcoin, whilst 5% have plans to adopt it within three years.

In contrast, the report found that PayPal was the most widely accepted alternative payment type. The payment processor is already accepted by 13% of those surveyed, whilst 49% plan on adopting it in the next three years.

Apple Pay, arguably the biggest threat to bitcoin, is only accepted by 8% of retailers, although an additional 48% have plans to accept it within three years.

The Google Wallet is currently being used by 3% of surveyed retailers, but 28% have plans to integrate the payment method in the next three years.

The survey also found that "payment security, real-time retail and implementing a unified commerce platform", were the top focus areas for retailers.

MerchantsPaymentssurveys

February 11, 2015 at 03:48PM

Read More

Twisted History of Ripple and Stellar Aired in Tell-All Report

In what can only be described as a bombshell report, The Observer has published a near 15,000-word story that takes a detailed look at the allegedly sordid history of decentralized payment network startups Ripple Labs and Stellar, and the impact of this relationship on events in the wider bitcoin ecosystem.

“The interpersonal story of Stellar and Ripple Labs is emblematic of the turmoil roiling the entire industry,” the article, penned by Michael Craig, reads. “It has everything: sex, huge money, fraud, genius, betrayal, international intrigue and government raids.”

Of particular note are the stories main participants Jed McCaleb, the founder of now-defunct bitcoin exchange Mt Gox, Ripple Labs and Stellar, and Stellar executive director Joyce Kim who bear the brunt of the article's barbs.

The Observer reports that McCaleb and Kim have long had a personal relationship that complicated McCaleb’s relationship with other senior executives and board members at Ripple Labs, and ultimately lead McCaleb to leave that company and found competitor Stellar.

Also included in the report are allegations that hit home far beyond the companies themselves, as it suggests the feud at the two companies has had implications for mobile payments startup Stripe and banking giant Wells Fargo, among others.

Wells Fargo bitcoin unit collapses

Of all the details included in the report, however, none perhaps has greater relevance than the revelation that US banking giant Wells Fargo had assembled a task force compromising 20 of its “top executives and advisors” that was aimed at finding ways it could become the first bank to embrace cryptocurrency.

The report argues that due to a combination of the Mt Gox collapse, the closure of Silk Road and McCaleb’s personal track record, the unit was disbanded in 2014.

“Predictably, Wells got cold feet,” Craig writes. “At the bank, the crypto blackout was so severe that it extended not only to shutting the accounts that cleared funds for crypto companies, but even those companies’ operating accounts … were shut down.”

This includes the account held by Ripple Labs, whose CEO Chris Larsen, the paper said, had a more than 20-year relationship with the bank prior to the decision.

“The problem is your connection to Mr McCaleb,” Larsen was told, according to the report. “The guy founded Mt Gox. You’ve got to get that guy out of there or we won’t bank you.”

At the time, McCaleb was no longer with the company, but the report suggests even his association as a board member was “enough to make Wells Fargo skittish” and move ahead with the dismantling of its nascent cryptocurrency initiative.

Turbulent times at Ripple

Speaking to the Observer, Kraken CEO and Ripple Labs investor Jesse Powell indicated that he first introduced McCaleb and Kim, and that before long, Ripple had purchased Kim’s company SimpleHoney and brought her into the team.

The Observer described her tenure as one that was not only rocky, but saw her attempting to play up her importance and that of McCaleb. Eventually, the report argues that Larsen needed to intervene.

“Chris sat her down and was like, ‘Joyce you’re a CEO. It’s going to be hard fitting in. You’re obviously reporting to me. Two cultures coming together is always a hard thing. Let’s talk about everything before we do it just to make sure everything is good.’ And Joyce just of course wouldn’t hear of it,” an insider said.

Kim is alleged as having a “Yoko Ono” role at the company, according to those who spoke to the report.

“This is Jed’s thing, when you’re in a private conversation with him all of a sudden Joyce is CC’d on this private conversation, even when the conversation includes the person saying, ‘I don’t want you to share this with Joyce.’ So not only does he disregard that request but he’s letting you know she knows you don’t like her,” another source said.

Kim’s tenure lasted only six weeks. McCaleb, the report contends, soon “lost interest” in the project.

Stripe deal squashed

The end result of the ensuing turmoil is that a deal that would have seen Ripple Labs be purchased by Stripe for $13m in cash never came to pass. The Observer indicated it was unable to uncover an exact reason for the deal’s demise.

Yet, another sticking point however, was that most of the leadership team at Ripple Labs held significant holdings of XRP. McCaleb and Larsen, for example, both owned 9bn XRP, a factor that discouraged many in the wider bitcoin market from trusting the company.

At the time, Powell also sought to intervene to fix what he described as the company’s ongoing PR problem.

All of the problems came together, the report said, in a meeting in which McCaleb attempted to have Larsen removed from the company for reasons not disclosed.

Larsen kept his role, however, by a 5-1 vote, with McCaleb providing the dissenting voice.

“Every single person begged Jed not to make us choose between him and Chris,” said Roger Ver, a VC investor in Ripple Labs. “In the end, the vote was unanimous that Chris should stay. The only person who disagreed was Jed.”

Attacks on Stellar

McCaleb would go on to found Stellar, taking a $3m investment from Stripe, though the article questions the nature of the relationship between the companies.

For example, Stellar’s former head of community told the publication that the two companies are quite close, with everything Stellar does having to go through Stripe.

Still, Stripe’s relationship with Wells Fargo, the report suggested, has put limits on how close the two companies can publicly appear.

The report quoted those close to co-founder Patrick Collison as describing him as privately dismissive of banks, while highlighting the reliance the San Francisco-based payments company has on institutions like Wells Fargo.

The article went on to question Stripe’s designation as a non-profit, arguing that tax experts believe this claim won’t hold up under regulatory scrutiny.

“Once the IRS pieces together how Stellar benefits McCaleb, Patrick Collison and any other insiders receiving STRs or fattening up in the initial distribution, it will likely find the venture inconsistent with the charitable purpose of the 501(c)(3) exemption,” the report reads.

Article’s accuracy questioned

Following the publication of the article, CoinDesk reached out to the parties involved for their take on the report and its implications.

Perhaps unsurprisingly, McCaleb moved to denounce the article as one that failed to capture the facts of the story.

"Given the vast amount of inaccuracies and innuendo in the article, it is not worth commenting on. The bias in the article is so obvious no one can take it seriously,” he said.

CoinDesk reached out to Kim and Ripple Labs for comment, but has not received an immediate response.

Newspaper image via Shutterstock

Chris LarsenJed McCalebRipple LabsStellarStripe

February 05, 2015 at 11:22PM

Read More

Central Bank of Italy Declares Virtual Currency Exchanges Are Not Subject to AML Requirements

The Central Bank of Italy (Banca d’Italia) is that country’s first governmental authority to issue a statement on virtual currencies. It recently published three directives:

1. Warnings on use of virtual currencies (30 Jan 2015);


2. Notice on virtual currencies (30 Jan 2015);


3. Notice of Central Authority for Reporting on virtual currencies (2nd Feb 2015).

The “Notice About the use of virtual currencies” (published on the Supervisory Bulletin No. 1, January 2015) is a summary of guidance previously issued by the European Central Bank (ECB), the European Banking Authority (EBA), and the Financial Action Task Force. The Central Bank of Italy is the first to release any statements based on the ECB’s comments. The Notice clarifies the legal status of virtual currencies in Italy with this important statement:

“In Italy the purchase, use and acceptance of virtual currency must be considered lawful activity: the parties are free to transact in amounts not expressed in legal tender.”

The January 30 Notice on virtual currencies also contains an analysis of the guidance published by the EBA, and agrees with the EBA’s recommendation that financial institutions should avoid buying or investing in virtual currencies until a formal legal framework has been established. This means the Central Bank will not ban regulated institutions from dealing in Bitcoin and other virtual currencies, but advises them to wait until formal regulations are announced.

The Notice allows financial institutions regulated by the Bank of Italy to do business with any virtual currency companies, provided that they respect existing AML/KYC requirements for account holders and warn them about the risks involved.

The Notice of Central Authority for Reporting on virtual currencies of Financial Intelligence Unit (FIU) warns that using virtual currencies may enable money laundering and terrorist financing, as previously discussed by the ECB and other European authorities. The FIU states that businesses dealing in virtual currencies, including holding them and exchanging them for fiat currencies, are not required to comply with any AML/KYC regulations.

A reading of the documents released by both the Central Bank of Italy and the FIU indicates that a business that transacts in virtual currencies is not subject to any regulation at this time. However, the owners of such businesses would be subject to existing AML/KYC requirements when setting up a bank account or dealing with a regulated financial institution. In that case, virtual currency activities are not subject to any unique regulations; instead the activities are regulated where they intersect with the existing AML requirements of the Italian financial system.

Italy is the first country to declare that virtual currency exchanges are not subject to any AML requirements. This is in contrast to the United States, where exchanges are required to register with the Financial Crimes Enforcement Network (FinCEN) as Money Services Businesses.

The FIU concludes with a recommendation that regulated financial institutions evaluate their own clients to screen for suspicious transactions. It also recommends that financial institutions educate their staff about virtual currencies and how to identify suspicious transactions, with a particular focus on gaming operators.

February 04, 2015 at 06:28PM

Read More

This week on Decentral Talk Live

by Bitcoin Magazine Staff on February 2, 2015 { }

Bitsquare is an open source, completely decentralized bitcoin exchange. Founder and developer, Manfred Karrer, discusses his project and his ideals with Ethan Wilding and guest host, Hai Nguyen. Bitsquare is based on the concept of “no single point of failure” and decentralization. Karrer also discusses the concept of peer-to-peer arbitration.

Andrew Lee of purse.io answers questions partially sourced from the bitcoin community. Purse.io’s model of selling Amazon giftcards for bitcoins is both controversial and exciting for people who want to buy bitcoins without going through the lengthy verification processes associated with exchanges. It also facilitates purchases through Amazon at a discount for people who want to shop with bitcoin. The DTL audience sent in some hard-hitting questions, and Andrew Lee has promised to answer them “head-on.”

Other guests this week will include Gerald Cotten of the Canadian exchange, QuadricaCX, as well as Mitchell Callahan, founder of Saucal, a marketing and brand development company that integrates bitcoin into its clients’ growth strategies.

Check out past videos at decentral.tv.

February 02, 2015 at 04:38PM

Read More