Kik came out with a sentence-by-sentence rebuttal to the SEC’s complaint against it, showing that the SEC took quotes out of context to imply that the speakers had said the exact opposite of what they’d meant. The fact that Kik wrote this comprehensive answer, as opposed to filing a motion to dismiss, was, like its decision to publish its Wells Response, a surprise. I spoke with litigator Rebecca Rettig, who predicted they would make this move, on this week’s Unconfirmed.
Also, be sure not to miss my lively conversation with another crypto lawyer, Jake Chervinsky, on Unchained, in which he and I discussed all matters relating to crypto regulation, including the Kik case.
In other news, Binance was being extorted over alleged customer data, which the hacker eventually released in a Telegram group. And Coinbase experienced a setback in a case over its Bitcoin Cash launch, which could eventually have wider implications for the industry.
The crypto weekend retreat at Omega Institute is canceled. I’m sad to say that I have decided not to proceed with the crypto workshop in September because I would prefer to devote that time to my book. Hopefully after I turn it in, I can offer something similar.
This Week’s Crypto News…
A hacker who initially claimed to be a white hat has been trying to extort Binance for a month (and let CoinDesk in on the negotiation) and this week released their alleged user data in a Telegram group. Binance says this is not current customer data but appears to stem from a 2018 breach and may have involved an outside company hired then to process an influx of user sign-ups for know-your-customer regulations. This article from The Block is shorter than the full CoinDesk saga. Binance is offering 25 bitcoins to anyone with information that can help identify the hacker, says Bloomberg.
On a somewhat related note, Binance CEO Changepeng Zhao (aka CZ) gave an interview to CoinDesk in which he opines on hot topics in crypto now, including the Binance.US launch, UK regulation, exchange hacks and insurance. His pragmatic take on Libra: “Don’t complain about adoption.”
(Scroll down to the last third for the analysis on this case.) Coinbase filed a motion to dismiss a case based on something called the economic loss rule, which is that “one does not possess a duty to exercise reasonable care against the economic loss of others.” The court rejected that, and according to crypto lawyer Stephen Palley, the significance down the line could be that crypto businesses could be held accountable for claims outside the contract.
According to Reuters, which saw a confidential U.N. report, the country is using the $2 billion to fund its nuclear program. The report cites at least 35 instances of North Korean hackers attacking financial institutions, cryptocurrency exchanges and mining activity across 17 countries. In perhaps related news, CoinDesk reports that a South Korean watchdog will more closely monitor cryptocurrency exchanges.
In June, Coinbase foiled what appears to be a premeditated attempted hack, which it described in full in a blog post published Thursday.
Fidelity and Reid Hoffman are customers of the mining service, which is open to enterprise customers and will open to smaller scale miners later. Crypto gadfly Tim Swanson calls proof of work wasteful.
Haven’t yet separated your phone number from your mobile carrier from every important account you have? Then let this tale of how rogue employees at phone companies can be easily bribed to give hackers easy entry into all your accounts give you motivation to do so. (Find out how to make sure any hackers who obtain your phone number get nothing here.)
TradeBlock notes that on-chain transactions in stablecoins (which excludes exchange activity) hit $37 billion in Q2, which was higher than Venmo volume. However, as Larry Cermak of the Block points out, one is trading and the other is payments, so it’s not apples to apples.
Larry Cermak of The Block analyzes the ICO trend, and it looks like a classic bubble. Only 11% returned more than 1,000%.
Very cool. From January 2009 to today.