BitDigest April 3 · Issue #629

• Digital currency end a strong 7-day period as alt-coins show their largest jump in months; BTC dominance drops to 62%
• Russia skeptical on positive impact of central bank digital currencies
• Venezuela issuing own COVID-19 assistance packaging providing doctors 1 petro each

This week I watched Deep Web a 2015 documentary on Silk Road, the Darknet marketplace that was seized by the FBI in 2013. Considered the underworld’s version of Amazon, Silk Road was run by the pseudonymous Dread Pirate Roberts (“DRP”). The market site had over 1 million registered users, 10,000 products and is reported to have generated over $1 billion in sales. In the crypto world, Silk Road represents the sale of illicit products the public associates with bitcoin.

I have always been interested in the Silk Road story. It’s a true criminal drama with the anonymity of the dark web marketplace, drugs, death (DRP supposedly hired a hit man to kill a former site moderator and as part of Federal agents investigation, they faked the killing of the individual sharing pictures of the dead man with DRP), theft (federal agents stole confiscated bitcoin from the site) and lots of suspense. In July 2013, Federal Agents intercepted a package containing fake IDs. When they delivered the package to Josh Terrey, a pseudonym used by Ross Ulbricht the pseudonymous DRP, he refused to answer their questions and the agents did not appear to link Terrey to DRP. Several weeks later, on October 2nd, 2013, Ulbricht was arrested while communicating on the Silk Road administrator’s forum from the Glen Park Public Library in San Francisco. The arresting agents were able to seize his operating computer before any attempts to encrypt its data were made.

Ulbricht was charged with money laundering, computer hacking, and conspiracy to traffic narcotics. He was not convicted of selling drugs or any illegal items, nor committing any violent crimes; he was not even charged with paying to have the former site moderator killed. Yet Ulbricht appears to have been held accountable for what others may have done on the site he created. He was given to two life sentences plus forty year without the possibility of parole. Ironically 9 other individuals were convicted with charges related to Silk Road with all 9, including the two federal agents, sentenced to a total 51 years in prison. This makes you question what if Mark Zuckerberg was held accountable for all the actions taken by users on his platform.

I have known a fair amount about this story having previously read American Kingpin by Nick Bilton and Silk Road by Eileen Ormsby, but the movie focuses its narrative on whether DRP was actually only one person (the movie suggests DRP was really 3 different people), how he was identified, and whether his rights under the 4th Amendment were violated. (The 4th Amendments protects people from unlawful searches and seizures.) During the trial, the government never revealed how they identified Ulbricht but it is believed that they were able to covertly access the Silk Road’s overseas servers leading them to the DRP himself. It was a good film but lacked the suspense of the novels.

Last week, Ulbricht celebrated his 36th birthday from jail. He has been imprisoned for over 7 years and expects to spend the remainder of his life behind bars. His family is lobbying for clemency. You can sign a petition supporting Ross on change.org.  

The Headlines

Russian Crypto Czar Looking for Benefits of CBDC

www.euromoney.com

Russia’s central bank first deputy governor has responsibility for its digital initiatives does not believe in digital currencies as means of payments. Olga Skorobogatova says cryptocurrencies “produce major risks for customers due to their high volatility, lack of guarantees for savings, widespread use for money laundering and financing of terrorism,” among other things. But she does have a more positive take on stablecoins, considering them more reliable “since they are backed by real assets and provide certain guarantees for individuals and legal entities.” Skorobogatova is looking to see if there is added value in a central bank issuing a digital currency.

Venezuela Airdropping 1 Petro to Doctors Fighting Coronavirus

www.decrypt.co

The government of Venezuela announced it will begin to reward medical professionals working to combat the coronavirus with a special allocation of 1 petro ($28 – 58.93 depending on Venezuela’s internal value methodology). The Special Bonus “Doctors of the Motherland” reward will be distributed to Venezuelan doctors while a second program will provide Venezuelans who were not able to work due to the quarantine a fiat payment.

Chinese SRO Warns Agains Investment in Crypto

www.coindesk.com

The National Internet Finance Association of China (NIFA), a self-regulated organization (SRO) affiliated with the People’s Bank of China has reiterated Beijing’s concerns against digital currencies. NIFA said that foreign-based crypto exchanges have falsified trading volume and that comparisons of digital assets to safe-haven options like gold and silver were not true given the recent market sell off.

SEC Delays Decision on tZero's Security Token Exchange

www.sec.gov

The Securities and Exchange Commission (SEC) has postponed a decision on tZero’s Boston Security Token Exchange (BSTX). BSTX proposed to operate a fully automated, price-time priority execution system to list and trade security tokens and for which ancillary records of ownership would be created and maintained using distributed ledger technology. The SEC is now requesting written submission from interested parties before it is willing to rule on any exemptions or regulatory changes allowing BSTX to operate under the 1934 Securities Act.

Brazil's Largest Brokerage Halts Crypto Activity

www.dailyhodl.com

Brazil’s largest equity trader, XP, has halted trading on it digital currency exchange and is proving clients 30 days to close their accounts. The company announced its “difficult decision” citing ““Market projection, competition and … regulatory advances.”

Revolut Adding Commission Free Gold and Crypto

www.altfi.com

Revolut announced it will launch commission free trading of crypto and traditional gold by the end of the month. The British fintech justified this decision based on the initial motivation behind the release of the digital assets “as an alternative to real money during times of quantitative easing and currency devaluation.”

Market Data

Indian Sentiment on Digital Assets

www.paxful.com

Crypto marketplace Paxful released a survey on the potential of digital assets in India highlighting what industries will lead the charge towards adoption, where crypto will drive the most progress, and sharing general sentiment from the population. 75.8% of respondents rely on digital currencies to easily and fairly transfer money and 64.8% believe it is the path to financial freedom. The survey found that activity will be greatest among corporation (67.4%) and enterprise companies (64.8%) with the respondents favoring an investment in crypto (40.4%) over traditional stocks and bonds (30.0%), real estate (14.2%), and gold and silver (14.0%).

Brave Adds 1 Million New Users

www.twitter.com

The Head of Marketing at Brave tweeted that the crypto friendly privacy blocking browser (you really need to try it) had added 1 million new users during March.

Exchange, Custody and Product News

Binance Announced CoinMarketCap Acquisition and

www.binance.com

Binance formally announced the completion of its acquisition of CoinMarketCap. CoinMarketCap will continue to be run as an independent business. Terms of the deal, reported to be as much as $400 million, were not released. Binance is also launching an OTC Trading Portal. The portal is a live request for a minimum quotation (RFQ) platform of $10,000 in which user will be able to confirm trades and receive quick settlement directly into their Binance accounts.

Maker to Transition to DAO

www.theblockcrypto.com

The Maker Foundation is expected to release a plan on Monday providing a roadmap for a self-sustainable DAO and the commencement of its dissolution within two years. The expected framework will contain three key elements: elected paid contributors and domain teams, Maker Improvement Proposals, and vote delegates.

Anchorage Adds Custody of XRP

www.medium.com

Digital asset custodian Anchorage announced it will begin offering custody for Ripple’s native token (XRP) and will look to add more advanced functionality like lightning-like payment channels should customers require it.