Exchanges

Coinbase Received 1,900 Requests for Client Info From Law Enforcement During First Half of 2020

17/10/2020 by Idelto Editor

Coinbase has revealed that it received a total of 1,914 requests for customer data from global law enforcement agencies during the first six months of 2020. It is, however, not clear how many of the requests were fulfilled.

In its first so-called“transparency report” published Friday, the U.S. crypto exchange – which boasts a user base of 38 million – said 97% of the requests had to do with criminal investigations.

U.S. agencies accounted for the biggest number of requests, sending 1,113 requisitions or 58% of the total. At least 441 (23%) came from the U.K., 176 or 16.5% from Germany and the rest from other parts of the world.

Inside the U.S., Coinbase disclosed that the Federal Bureau of Investigation (FBI) requested the most information. It submitted 340 requests followed by Homeland Security Investigations (184), local state agencies (180), and the Drug Enforcement Administration with 104 requests.

Other requests were drawn from the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Secret Service, the Postal Inspection Service, the Department of Justice, and the Immigration and Customs Enforcement.

Paul Grewal, chief legal officer at Coinbase, said the requests from law enforcement largely come in the form of subpoenas. Sometimes, the requests involve search warrants, court orders, and other formal processes, he added.

“We respect the legitimate interests of government authorities in pursuing bad actors who abuse others and our platform,” noted Grewal, adding, “yet we will not hesitate to push back where appropriate…”

Coinbase’s “transparency report” comes after the exchange’s censure by the digital rights group Economic Frontier Foundation. The group recommended Coinbase publish such reports “for the public to know who is making those requests, or how often.”

What do you think about Coinbase cooperating with law enforcement agencies? Let us know in the comments section below.

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187,000 BTC Drained: Over $2 Billion in Bitcoin Leave the Top Exchanges Since June

16/10/2020 by Idelto Editor

Cryptocurrency reserves held on digital asset exchanges have been dropping to new lows, as some of the top exchanges have seen significant bitcoin reserve balance drops. A few months ago trading platforms had a lot more bitcoin reserves on hand and onchain data shows a few exchanges have seen customers steadily drain 187,000 bitcoins ($2.1B) from exchange-owned cold wallets.

In February, Coinbase had 1 million bitcoin under management and today reserves are down over 9% as 92,000 bitcoin ($1B) has left the exchange. Today, according to Bituniverse’s online exchange balance rank tracker, the San Francisco trading platform has 908,560 BTC under management.

36,000 BTC ($408M) left Coinbase since news.Bitcoin.com’s reserves report published on June 30, 2020. A number of top exchanges below Coinbase have also seen cold wallets drained during the last three months.

The top seven exchanges in terms of balance holdings on June 30, 2020, according to Bituniverse’s exchange balance rank tracker.

The second-largest exchange in terms of bitcoin reserves held is Huobi and the trading platform is down over 53,000 BTC ($601M) since June 30. Binance’s balances remained the same as the exchange holds 266,000 BTC today and three months ago, Binance held 269k BTC. Similarly, the fourth-largest reserve holder, Bitfinex, didn’t see much movement in the last three months.

The top seven exchanges in terms of balance holdings on October 16, 2020, according to Bituniverse’s exchange balance rank tracker.

Three months ago, Okex had 240,000 BTC on hand but today, Okex only has 198,000 BTC in reserves. This means 42,000 BTC left Okex since June as 17.5% left the exchange in the last three months.

Statistics show out of the top five crypto trading platforms over 187,000 BTC ($2.1B) has left these exchanges since the June report.

Just recently, Bitmex had some legal troubles with the U.S. government and since the incident, a lot of bitcoin has left the derivatives exchange. Three months ago Bitmex had 224 BTC in reserves and today the exchange only has 113,000 in cold storage. Onchain data indicates Bitmex lost a whopping 49.55% in BTC reserves since June 30.

At the time of publication, Glassnode’s “Exchange Balance vs. Bitcoin” stats show that there’s 2.7 million BTC held on exchanges today. Glassnode’s stats indicate that out of the 21 million BTC cap, exchanges hold 12.85% of all that will exist, and 14.59% of the 18.5 million BTC in circulation.

1.8 million BTC out of the aggregate 2.7 million BTC held on exchanges sits in the world’s top five crypto trading platforms. The top five custodial platforms by BTC reserve status include Coinbase, Huobi, Binance, Bitfinex, and Okex.

Exchange balances have been riding lower consecutively for the last 15 months and the last time balances were this low was around May 2019. To many crypto enthusiasts and traders, the low balances on exchanges suggest users are storing assets in a noncustodial fashion as opposed to leaving funds with a third party.

The data from Bituniverse and Glassnode also suggests that liquidity and selling pressure may lower.

What do you think about the low number of bitcoins held collectively on global exchanges today? Let us know what you think about this subject in the comments below.

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Okex Halts Withdrawals Due to ‘Out of Touch’ Private Key Holder, Founder Star Xu Talks With Police

16/10/2020 by Idelto Editor

The digital currency exchange Okex disabled cryptocurrency withdrawals on Friday morning and explained that funds were “safe and not affected.” Following the withdrawal announcement, regional reports claim that Okex’s founder Mingxing “Star” Xu was taken away by the police.

On Friday morning (ET) a local report from the publication Caixin detailed that the founder of Okex, Mingxing “Star” Xu, was taken away by the police. Hours before the Caixin published the report, Okex’s official Twitter account announced pausing withdrawals on the exchange.

“Withdrawals of digital assets/cryptocurrencies Okex are currently suspended,” the trading platform wrote. “Other functions are up and running. Your funds and assets are safe and not affected. We sincerely apologize for any inconvenience. Further announcements will be made.”

The withdrawal announcement also provides a blog post link which explains the action in more detail. According to the post, a private key holder from the exchange is currently unavailable and working with law enforcement. The identity of the private key holder is not mentioned in the blog post.

“One of our private key holders is currently cooperating with a public security bureau in investigations where required,” the trading platform stressed. “We have been out of touch with the concerned private key holder. As such, the associated authorization could not be completed.”

The Caixin report isn’t very clear and it explains that two unidentified sources told the media publication about the incident. Cryptocurrency markets took a hit after the withdrawal announcement and the following local reports concerning Xu. Regional reports also show that Star Xu talked with Shanghai police in 2018 as well in regard to an investigation.

Currently, Okex is the fifth largest digital currency exchange in terms of reserves held, according to Bituniverse’s exchange balance rank. The platform presently holds 198,000 BTC or $2.2 billion worth using today’s exchange rates.

What do you think about the issues at Okex? Let us know what you think in the comments below.

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Mt Gox Rehabilitation Plan Delayed Again to December 15

15/10/2020 by Idelto Editor

The submission deadline for the Mt Gox civil rehabilitation plan has been extended once again, this time to December 15. The deadline has been pushed back at least three times before, including in the latest case, where submission was scheduled for October 15.

Mt Gox’s rehabilitation trustee, Nobuaki Kobayashi said Thursday that he needed more time to finalize the plan, “as there are matters that require closer examination with regard to the rehabilitation plan”.

The Tokyo District Court granted Kobayashi, a Japanese lawyer appointed to oversee the repayment of investors, the deadline extension he sought on Oct. 14.

Mt Gox went from handling 70% of global bitcoin trades in 2013 to bankruptcy in 2014 after more than 850,000 BTC (worth over $470 million at the time and about $9.7 billion now) were supposedly lost to hackers, with 200,000 bitcoins recovered two weeks later.

Following the hack, the court later ordered the civil rehabilitation effort, which started in 2018. The idea was to reimburse creditors in their original cryptocurrency holdings rather than the cash equivalent at the time of the Japanese exchange’s collapse.

Kobayashi is reportedly holding up to 150,000 BTC in refund money, but no one has been repaid just yet. The portfolio caused quite a stir in the past fortnight, with suggestions Mt Gox creditors were to be repaid the entire amount, or a part of it, on October 15.

If all those coins were suddenly dumped onto the market, analysts said, there was a strong likelihood some investors would consider selling once they received their bitcoin, which could potentially crash the market. When Mt Gox was hacked, each BTC cost just $400. Today, it’s nearly $11,400. However, the deadline extension puts the concerns to rest, at least for now.

What do you think about the latest Mt.Gox rehabilitation plan deadline extension? Let us know in the comments section below.

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Centralized Exchange Operators Believe Low Liquidity on DEX Platforms Stops User Migration

14/10/2020 by Idelto Editor

Centralized cryptocurrency exchanges (CEX) operators say they are unfazed by the increasing trading volumes on decentralized exchanges (DEX) because the latter’s liquidity is still too insignificant to cause user mass migration. The majority of CEX operators also insist that it is very unlikely the DEXs’ liquidity would surpass their own liquidity in 2 years’ time.

The comments by operators of CEX platforms come at the time when traded volumes on DEX applications are increasing courtesy of the rapidly growing Defi ecosystem. Underlining this growth is Uniswap’s monthly trade volume which exceeded that of Coinbase in September.

CEXs Rule Liquidity and Fiat Compatibility

As data from the survey conducted by cryptocompare.com shows, CEX operators are conceding that volumes on DEXs are growing, but they suggest different reasons why this is happening. To begin with, the survey data shows that about 46.2% or 12 out of 26 of the responding operators “believe that the anonymity afforded by DEXs was the primary reason users traded on DEXs.” About 19.2% (5) believe the self-custody feature is the secondary driver of volumes on DEXs.

Meanwhile, four CEXs or 15% of respondents say yield farming is another driving factor while just two exchange operators believe the lack of a third party operator to be the reason users are flocking to DEXs.

However, on the flip side, the respondents thought that “liquidity and fiat compatibility were the two main reasons why users preferred CEXs over DEXs.”

When asked about the possibility of DEXs usurping CEXs in the liquidity stakes, over 70% thought this will not happen anytime soon. The survey says:

Exchange operators felt their deeper liquidity would be an unassailable competitive advantage in the next 2 years. Over 70% of respondents thought it was unlikely or very unlikely DEX liquidity would surpass CEX liquidity in 2 years’ time.

Interestingly, the survey data shows that 40% of the respondents say “they are actively building or may build a DEX in the near future.”

With respect to the issue of user experience (UX), the respondents were less emphatic about the prospects of CEXs on this. According to the findings, just “57% of respondents believe it was unlikely or very unlikely that DEXs will have better UX in 2 years.” Only 11% of respondents thought that DEXs will have better UX than CEXs in 2 years’ time.

Operators Expect Fees to Fall

Meanwhile, the survey notes that as more digital asset exchanges are launched, “questions are being raised around the legitimacy of the volumes garnered by these upstarts.” Some analysts predict that there will be a decline of exchanges either through mergers and acquisitions or competition driving out weaker exchanges.

On this subject, cryptocompare.com shows that opinion is almost evenly divided as 42.3% of respondents expect to see an increase in this number next 2 years while 46.2% are expecting to see the number decline. On the question of fees, “there was more alignment with 65% of exchanges expecting to see trading fees decrease and only 11.5% expecting fees to increase.”

On the question of institutional investors entering the sector in the next two years, there was near unanimity as 92% of exchanges were optimistic that there will be a rise in
institutional investors entering the sector in that period.

What do you think will be the outcome of the rivalry between DEXs and CEXs in a year’s time? Share your thoughts in the comments section below.

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