OneCoin Leader Arrested, Fidelity Opens Digital Assets Services Company
In this week’s news roundup, we talk about how BTC’s recent (and historical) movements are painting a bullish future for the market as a whole, cover a first for institutional investing that may help propel a bright crypto future, explain why Warren Buffett’s continued bitcoin pessimism may be a good thing, and review the latest in crypto’s biggest Ponzi scam since Bitconnect.
Crypto Market Ends Week Up, Era of Institutional Adoption Officially Begins
The price of bitcoin rose another 3% over the course of last week, which makes it up an encouraging 22% since its last low of $3,200, set back in December. With each passing day, more analysts are declaring that the bottom for BTC is finally in. Though prices seem stagnant, the fact that they are not dropping week-over-week is a significant improvement upon last year’s continuous bear market woes. Friday the 15th represents the 3-month anniversary of bitcoin’s last bottom, which can potentially be translated into meaning that a new bull market will then be 3 months old.
The overall trend of the market was decidedly up last week, with about $7 billion being added to the total market cap of all coins. Litecoin (LTC) continued its roaring ascent, ending the week up close to 19%, while Binance Coin (BNB) and Stellar (XLM) both posted double-digit gains. There were only 4 coins in the top 100 that ended the week on a down note, those being Dogecoin (DOGE) (-0.4%), MaidSafeCoin (MAID) (-3.0%), Electroneum (ETN) (-9.6%), and Nexo (NEXO) (-1.5%).
In addition to seeming to have established its price bottom in December, another technical analysis indicator also recently turned bullish for the price of BTC, which is the Relative Strength Index (RSI). As defined by Investopedia, “the RSI is a momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset,” and BTC is currently sitting at what would appear to be the bottom of a multi-year “oversold” cycle. When plotted on a chart with bitcoin reward halving cycle, history shows that RSI traditionally begins an upward ascent around this period in the cycle; another bit of compelling evidence which suggests BTC may once again be on the up-and-up.
— planB (@100trillionUSD) March 10, 2019
Helping to pave the way for institutional adoption of cryptocurrency, financial services giant Fidelity recently rolled out their new company geared toward helping large investors and hedge funds invest in cryptocurrency. Fidelity Digital Asset Services opened for business in March, hoping to satisfy the increasing demand for such products that exists in spite of a sluggish market. While other potential Wall Street-oriented crypto catalysts, like the approval of a Bitcoin ETF and the launch of the stock exchange-owned Bakkt remain pending, the launch of Fidelity’s new company can potentially stand in as a replacement to help the the bull market ball rolling.
Buffett’s Slams on Bitcoin Could Be Positive Signal
Famed billionaire investor Warren Buffett has never been a fan of bitcoin, and his latest words on the mother of all cryptocurrencies are surprisingly unflattering. This time around was a little bit different, as he admitted he thought that it was “ingenious” and that the invention of the blockchain was “important.” However, his general attitude about cryptocurrency remains relatively negative as he generally does not consider it to be an investment so much as “gambling.”
Barry Silbert, CEO of Digital Currency Group and an avid bitcoin fan, recently noted in a tweet that Buffett’s #1 investment, Wells Fargo, has paid over $14.8 billion in fines for fraud and abuses since 2000, saying that he would take bitcoin’s “charlatans” over that company “any day.” Buffett, admittedly, has never been a great tech investor, telling shareholders of his company Berkshire Hathaway in a 2017 annual meeting that he was “too dumb” to appreciate the ingenuity behind Google and Amazon earlier on, and that it was a mistake not to have invested in them.
Throughout the course of his impressive career, Buffett has always relied on a particular model when choosing companies to invest in, chiefly their ability to produce products that had long-lasting value and would always be of necessity or at least favored by the general public. His strategy can be characterized in his belief that one shouldn’t invest in a stock for 10 minutes if they don’t think the company is worth investing in for 10 years. However, as cryptocurrency is an extremely new industry relative to the span of his career, it falls outside of his criteria for investment, as do most cutting-edge technologies.
One thing for certain is that Buffett’s track record on bitcoin predictions are anything but a certainty, which could possibly be construed to mean that, if trends hold, it will continue to defy his expectations.
A timeline of Buffett’s public opinions on bitcoin:
March 14th, 2014: “Stay away from it. It’s a mirage, basically… The idea that it has some huge intrinsic value is just a joke in my view.”
October 29th, 2017: ““You can’t value bitcoin because it’s not a value-producing asset.”
May 4th, 2018: “[Bitcoin is] probably rat poison squared.”
February 25th, 2019: “Its ingenious, and blockchain is important, but bitcoin has no unique value at all.. It’s a delusion, basically.”
— Inane Foibles🇺🇸🇮🇪🇪🇺 (@inanefoibles) March 11, 2019
OneCoin Leader and Brother of Ponzi Founder Arrested in Los Angeles
In a press release from the U.S. Department of Justice released last Friday, it became known that the FBI had arrested Konstantin Ignatov, brother of OneCoin mastermind Ruja Ignatov, and a heavy promoter of what was referred to as a multi-billion dollar “international pyramid scheme.” OneCoin, at one point referred to as a “Bitcoin Killer,” had roped in about 3 million investors from 150 countries around the globe, who became lured by its advertised prospects of fast, easy profits, thanks to a new “blockchain revolution.” One of the main problems with this premise is that OneCoin did not actually have a blockchain at all, and only existed as a record of database-driven accounts.
Indeed! HERE is what the FBI criminal investigations into #Onecoin $4 billion fraud scam have CONCLUDED:
— Tim Tayshun (@ezCoinAccess) March 7, 2019
Manhattan U.S. Attorney Geoffrey S. Berman described the scam as a run-of-the mill Ponzi that was using a new technology to further an age-old scam:
“As alleged, these defendants created a multibillion-dollar ‘cryptocurrency’ company based completely on lies and deceit. They promised big returns and minimal risk, but, as alleged, this business was a pyramid scheme based on smoke and mirrors more than zeroes and ones. Investors were victimized while the defendants got rich. Our Office has a history of successfully targeting, arresting, and convicting financial fraudsters, and this case is no different.”
On November 22nd of last year, the man thought to be #2 in command behind the Ponzi scheme, Sebastian Greenwood, was captured by the Crime Suppression Division (CSD) in Thailand and extradicted to the United States, accused of being involved with the laundering of some $400 million. Greenwood had disappeared in 2016 back before the OneCoin scam had completely collapsed. Around that time, the company stopped paying affiliate ROI requests as no new earnings were coming in from new customers.
Records obtained during the course of the joint FBI/IRS investigation indicate that between the fourth quarter of 2014 and the third quarter of 2016, OneCoin Ltd. generated $3.8 billion in sales revenue, with an earned “profits” total of $2.5 billion.
Highly similar to the infamous Bitconnect Ponzi scheme which came under fire during late 2017, collapsing early the next year, investors from around the globe let their better judgment fall to the wayside, blinded by prospects of high returns and swank lifestyles. Of course, all such “profits” were always based on incoming member funds, with nothing being produced other than an endless series of referrals and affiliates. FBI Assistant Director-in-Charge William Sweeney, Jr. summed up the nature of OneCoin’s empty existence in the Justice Department’s press release:
“As we allege, OneCoin was a cryptocurrency existing only in the minds of its creators and their co-conspirators. Unlike authentic cryptocurrencies, which maintain records of their investors’ transaction history, OneCoin had no real value. It offered investors no method of tracing their money, and it could not be used to purchase anything. In fact, the only ones who stood to benefit from its existence were its founders and co-conspirators.”
With her brother currently in jail awaiting trial, Ruja Ignatova remains missing, having disappeared from public view in October 2017. She is wanted by the FBI for her role in founding the scam, charged with wire fraud, conspiracy to commit wire fraud, securities fraud, and conspiracy to commit money laundering, each of which carries a maximum sentence of 20 years, among other charges.
Also in the News
- CEO of banking coin Ripple (XRP), Brad Garlinghouse, took the opportunity to rip into JPMorgan’s up-and-coming JPM Coin while speaking at a blockchain summit in Washington D.C. last week. Garlinghouse pointed out that neither JPMorgan or its competitors had plans to use their coin for inter-bank transfers, meaning its use would solely be confined to JPMorgan-based products. Noting that JPM Coins could be bought for one dollar from their customers, Garlinghouse questioned why customers wouldn’t “just use the dollar,” exclaiming, “I don’t understand what problem that solves.”
As predicted, banks are changing their tune on crypto. But this JPM project misses the point – introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer https://t.co/39EAiSJwAz https://t.co/e7t7iz7h21
— Brad Garlinghouse (@bgarlinghouse) February 14, 2019
- In an attempt to again become profitable, mining hardware developers Bitmain are sending 100,000 of their miners to the Sichuan province of China in hopes to make the best use of the region’s cheap hydroelectric power resources. Sichuan is home to the majority of China’s bitcoin mining operations and one of the only currently-profitable mining centers on the planet. The company is looking for ways to revamp earnings after a dismal 2018, in which CEO Jihan Wu stepped down from his position after the company failed to launch its public stock offering as planned.
- Twitter’s Jack Dorsey is back in the news again after saying that he purchased $10,000 a week in BTC on the podcast Tales from the Crypt. Dorsey is quickly becoming the biggest celebrity spokesperson for bitcoin, after carrying the Bitcoin Lightning torch last month and announcing plans to integrate the Lightning Network into Twitter so users could have the ability to tip each other small amounts of BTC.
- In another new first of its kind, a Bitcoin Lightning Network payment has been completed over ham radio, furthering the notion that bitcoin transfers no longer needed the internet in order to take place. The transaction occurred between two amateur radio enthusiast bitcoin coders, with one party being in San Francisco and the other in Toronto. While internet connectivity is still necessitated in order to accept and finalize invoices, the fact that the information contained within the invoice can be transmitted without internet renders Lightning an extraordinarily different approach to cryptocurrency transaction as it was traditionally known.
Bitcoin FTW pic.twitter.com/ZEEe7K3Q4A
— NVK (@nvk) March 1, 2019
- In a real world use case scenario which demonstrates the creativity of business situations for which the blockchain is being deployed, Bumble Bee Foods announced in a press release that they would be using the SAP Cloud Platform Blockchain service to track the delivery of tuna fish. The tracking starts in waters off Indonesia, where the fish are caught, and continues all the way until they are delivered to merchants who purchase their products. The reason for doing so is to insure that the company is committed to sustainable fishing practices. Other information recorded to the blockchain include the size of the catch, its point of capture, the fishing community that caught it, as well as “valuable insights to verify authenticity, freshness, safety, fair trade fishing certification and sustainability.”