PayPal Launches into Crypto in Surprise Move!
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Biggest crypto news of the week: Paypal announces they’re moving into cryptocurrency. First, some quick bytes from the week.
Quick Bytes
OKEx Mystery Suspension
OKEx suspended cryptocurrency withdrawals indefinitely this week, apparently because one of the exchange’s key-holders has been "out of touch” with the exchange because they are “cooperating with a public security bureau in investigations.” This means that approximately 1.1% of the total circulating BTC supply is currently frozen.
The exchange said: “We will resume digital assets/cryptocurrencies withdrawals immediately once the concerned private key holder is able to authorize the transaction.”
This holder was unnamed, but Mingxing "Star" Xu, OKEx’s founder, was apparently taken by police at least a week ago and reports say that he hasn't been seen since.
OKEx said the issue involved a personal matter, not the exchange, and shouldn’t affect ongoing business. Furthermore non-crypto withdrawals are apparently still processing, and all non-crypto or digital-asset operations are unaffected.
But surely it's not true that one of the largest cryptocurrency exchanges has a single point of failure?
Jameson Lopp tweeted:
“Either they have a distributed redundant setup as claimed on their security page OR there is a single key holder whose disappearance halts spending.”
But they’re not processing withdrawals from cold storage, so as Vanalli said:
“This seems more like a decision they've made to suspend withdrawals.”
OKEx moved out of China in 2017 after the Chinese crackdown on crypto trading, and although is based now in Malta, maintains an office in Hong Kong.
Iamnomad speculates that this public announcement has more to do with the government asking them to pause withdrawals, and mentions that OKEx famously has a business continuity plan that includes kidnap, murder and torture.
The OKEx P2P platform resumed trading yesterday for limited fiat pairs. And OKB, the native exchange token for OKEx, had a 30% drop in value across 2 days, from which it has rebounded slightly.
Ethereum / Filecoin
Large Ethereum-focused technology company, ConsenSys, announced a partnership with Protocol Labs, the company behind Filecoin. Filecoin launched on its mainnet last week, and was one of the most anticipated launches from the 2017 ICO era. They aim to be the Airbnb for data storage.
Both the CEO of ConsenSys, Joseph Lubin, and CEO of Protocol Labs, Juan Benet, joined me to talk about the partnership, and how decentralized storage is a crucial part of the web 3.0 infrastructure that the Ethereum community has also been helping to build.
Lubin said that they plan to integrate Filecoin with Ethereum at every layer of the decentralized technology stack, with the launch of new products like tokenized FIL on the Ethereum chain, as well as a Filecoin storage marketplace that will make price discovery for storage on the Filecoin network simple and transparent.
Benet says that Filecoin’s open network will foster a more sustainable and globally accessible web infrastructure. The IPFS system he built promises both faster and cheaper retrieval of data, eliminating the need to rely on centralized servers, and Filecoin now provides an economic incentive for that system.
Famous Bitcoin Bar Closes
Room 77, one of the world's first bars to accept bitcoin, closes down after struggles with COVID restrictions. I visited the bar in 2015, and it was really something special. Take a look at it here.
Kik to Pay Millions for ICO
We all had high hopes for Kik when it decided it was going to fight the SEC in court. In 2019, The U.S. Securities and Exchange Commission sued Kik for allegedly running an unregistered securities sale for their ICO.
Kik want to fight the SEC in court in order to create a precedent for how token sales might be treated under U.S. securities law. However, in March it decided against a jury trial request, and then last month lost a motion for summary judgement.
This week the judge ordered Kik to pay $5 million. Kik must also give the SEC 45 day’s notice on any KIN token transactions for the next three years. A disappointing end to what many hoped would provide pushback against the SEC.
Zcoin
Zcoin launched their Lelantus protocol on testnet. Reuben Yap, cofounder of Zcoin, told me that the move represents a huge step forward for Zcoin and cryptocurrency privacy in general.
"The Lelantus protocol will allow people to wipe the slate clean of their coins, erasing their history, without requiring any sort of trusted setup … which is really important when trying to preserve a trustless cryptocurrency."
He says the plan is to activate on mainnet by early January.
Next week I will be able to announce the new Zcoin rebranding: Stay tuned!
Zcash
Zcash is entering the world of DeFi. Tokensoft and Anchorage announced wrapped Zcash, a 1:1 representation of Zcash on the Ethereum blockchain. The underlying asset will be held in custody by Anchorage, and this move will allow Zcash to join the plethora of other assets enjoying the DeFi Wild West.
Bahamas CBDC
The Bahamas has officially launched its own "Central Bank Digital Currency" (CBDC), called the "Sand Dollar". It's issued and regulated by Central Bank of The Bahamas and shares the same monetary stability as the Bahamian fiat. The Central Bank of The Bahamas said the aim is:
"To advance more inclusive access to regulated payments and other financial services for under-serviced communities and socio-economic groups as well as to reduce service delivery costs and increase transactional efficiency for financial services across the Bahamas."
Full stack
PayPal
The biggest new of the week that sent the price of bitcoin jumping to over $13000:
PayPal announced they’re finally jumping onboard the crypto bandwagon.
Whilst apparently snickering at the bitcoin space back in 2012, this week they announced their 346 million customers will, starting over the next few weeks, be able to buy, hold, and sell certain cryptocurrencies within the PayPal wallet. Initially this includes Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, but I presume will extend to other currencies before long.
Next year, they plan to offer this functionality on Venmo, and also allow people to use cryptocurrency to pay for goods or services from merchants who accept PayPal.
This initial rollout will be available in all US states except Hawaii, and will even be available to customers in NY through a partnership with Paxos that allowed them to be granted a conditional bitlicense.
But there are some important details in the fine print of PayPal’s announcement:
“The crypto in your account cannot be transferred to other accounts on or off Paypal.”
Meaning you can buy it, hold it in your account, and sell it, but not much else.
Furthermore, they’re providing a custodial service where customers will not actually be in possession of their private keys.
But most agree that this is still incredibly bullish news for bitcoin, as the price jump reflected. A major financial powerhouse endorsing cryptocurrency is a huge step towards adoption.
As Michael Novogratz tweeted:
"This PayPal news is the biggest news of the year in crypto. All banks will now be in a race to service crypto. We have crossed the rubicon."
I summarize into the crypto news from this week
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