Automated trading programs, or bots, are manipulating digital currency prices on cryptocurrency exchanges, according to a Wall Street Journal (WSJ) report October 2.

Automated trading software is a program that allows traders to set specific rules for both trade entries and exits, submit orders to a market center or exchange, and then automatically executes them by means of a computer at speeds greater than any human is able.

Trading programs are available for traditional and crypto markets, and can be deployed for both legitimate and manipulative strategies.

Addressing crypto markets, WSJ cites a lack of proper regulation as the main condition that allows bots to execute abusive strategies on an industrial level. Andy Bromberg, co-founder and president of startup CoinList, told WSJ that “this sort of activity is rampant in the market right now. It hurts the market’s reputation, and it hurts individual investors.”

According to WSJ, $80-million digital currency hedge fund Virgil Capital uses its own bots on a number of crypto exchanges around the world. Stefan Qin, managing partner of Virgil Capital, told WSJ that he is in a constant cat-and-mouse game with enemy bots.

Per WSJ, Virgil lost funds on certain trades in Ethereum (ETH) earlier this year after a “harassing bot” targeted the fund. The WSJ further explains the strategy used by the bot:

“The bot’s strategy was similar to ‘spoofing,’ a practice in which traders enter fake orders only to cancel them. The tactic, aimed at tricking other investors to buy or sell an asset by falsely signaling there is more supply or demand, was outlawed in U.S. stock and futures markets in 2010.”

Another example of price manipulation in digital currencies cited by WSJ is trader Kjetil Eilertsen, who began trading Bitcoin (BTC) in 2011. Eilertsen reportedly developed a program called Quatloo Trader, that was promoted as “the best market-manipulation tool in the world of crypto.” The idea of the program is to make market manipulation easier by using built-in tools like a special tab called “whale tools,” which executes several “abusive strategies.”

Eilertsen told WSJ that it is pointless to ban manipulation in digital currencies, and that it would more effective to provide manipulation tools to small traders. “If everybody can manipulate, then nobody is manipulating. You can’t ban anything from people who are dedicated to doing something,” Eilertsen told WSJ.

Notably, similar programs are not permitted on traditional securities exchanges. The New York Stock Exchange regularly monitors operations for illegal trade activities and abusive trading, and punishes violators.

Last week, the WSJ reported that nearly $90 million in illicit funds had been funneled through various crypto exchanges, including ShapeShift. Yesterday, ShapeShift founder and CEO Erik Vorhees refuted WSJ’s claims. He stated that the publication had misrepresented facts and made mistakes in their reporting due to a lack of knowledge of the exchange’s operations and blockchain technology.

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Charles Schwab Exec Joins Coinbase BoardNEWS
Chris Dodds, who serves on the board of directors of the Charles Schwab Corporation, has joined cryptocurrency exchange Coinbase's board of directors, according to an announcement published October 2.

The Charles Schwab Corporation is a brokerage, banking and financial advisory services firm based in San Francisco. Per the firm’s annual report, the company had $3.36 trillion in client assets, 10.8 million active brokerage accounts, and 1.2 million banking accounts, as of December 2017.
In addition to the Coinbase board, Dodds will reportedly contribute to the exchange’s expansion in terms of financial services capabilities.

According to the announcement, Dodds has held various leading financial positions in treasury, corporate development, and financial planning and analysis. At Charles Schwab, Dodds has worked as VP of corporate finance and mergers and acquisitions, as well as treasurer.

Dodds’ joining Coinbase is the latest in a series of talent acquisitions by the San Francisco-based crypto exchange and wallet services provider.

Last month, Coinbase hired former Fannie Mae General Counsel Brian Brooks as their new Chief Legal Officer, who will be responsible for legal, compliance, and government affairs. Also in September, the exchange welcomed Former LinkedIn executive Michael Li as the VP of data.

In August, former Amazon Web Services (AWS) and Microsoft employee Tim Wagner joined Coinbase as VP of engineering, while in July the exchange announced that ex-Pershing exec Jeff Horowitz will join the company as Chief Compliance Officer.

Recently, Coinbase rolled out a new update called “Coinbase Bundles,” which are designed to simplify cryptocurrency trading. The product represents a basket of five cryptocurrencies supported on Coinbase — Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC), and Ethereum Classic (ETC) — and are purchased in proportion to their market capitalization in U.S. dollars.

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Puerto Rico’s Noble Bank International, which is known for reportedly opening accounts for USD-backed token Tether and crypto exchange Bitfinex, is allegedly searching for a buyer, Bloomberg reports Thursday, October 2.

Citing an unnamed person familiar with the case, Bloomberg reports that Noble Bank has lost Tether and Bitfinex as clients, among others, and is currently on the search for a buyer. The bank, which sources tell Bloomberg is no longer profitable, might sell for a price from $5 to $10 million, which is mostly formed by the value of its Puerto Rican license for international financial operations.

Noble Bank officials declined to comment the matter to Bloomberg, while Tether and Bitfinex were not immediately available for the comments.

Back in 2017, U.S.. bank Wells Fargo dropped Tether and Bitfinex — who share a CEO, Jan Ludovicus van der Velde — as clients, Bloomberg notes. The two entities had also reportedly

Tether and Bitfinex were looking for other banks when Noble — one of the only two full-reserve banks in Puerto Rico that publicly operates with crypto assets — emerged as a possible option, according to a Bitmex report.

While Tether had broken ties with their auditor in January 2018, an unofficial audit of Tether in June reported that the stablecoin has enough in dollar reserves to back its tokens. Bloomberg notes that Noble was audited by Puerto Rico’s bank regulator last year in a move that “raised concerns,” but that the bank has not been “faulted publicly.”

As experts told Cointelegraph in early 2018, Puerto Rico was seen by many as a possible crypto paradise, as U.S. taxpayers were not obliged to include incomes from sources within Puerto Rico to in their tax declarations. However, the U.S. Internal Revenue Service (IRS) and local island authorities were expected to intervene in the situation in order to get "billions" from crypto taxation.

In possible competition with Tether, three new stablecoins backed with the U.S. dollar launched this September. In the beginning of the month, Paxos and Gemini separately announced two stablecoins called the “Gemini dollar (GUSD)” and the “Paxos Standard (PAX),” both backed 1:1 with crypto. Later, Circle Internet Financial launched its own USD-backed digital token named the “USD Coin.”

According to CoinMarketCap data, Bitfinex saw a 23 percent decrease in daily trading volume on Monday, October 2.

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Venture Capital Investment in Blockchain and Crypto Up 280% in 2018, Report ShowsNEWS
“Traditional” venture capital (VC) investment in blockchain and crypto firms has almost tripled in the first three quarters of 2018, according to a new Diar report published September 30.

Diar cites data from Pitchbook that indicates that blockchain and crypto-related firms have raised almost $3.9 billion in VC capital in so far this year — a 280 percent rise as compared with last year. The rise comes not just in terms of an increasing number of deals, but also in the burgeoning median value of each, which has grown by over $1 million this year.





The combined total of the ten largest deals in 2018 came to $1.3 billion, with nine of these representing traditional equity investments, rather than purchases of utility crypto tokens. The outlier was the DFINITY token, which raised a combined $163 million from VC investors Andreessen Horowitz, Hashed, and Polychain Capital.

Pitchbook’s figures revealed that Barry Silbert’s Digital Currency Group (DCG) was “by far” the most prolific investor from the VC sector, closing over 110 deals in the crypto and blockchain space this year. DCG outflanked both Blockchain Capital and Pantera Capital, whose combined deals clocked in at 100.

Other strong investors included VC firms Andreessen Horowitz, Danhua Capital, and Future Perfect Ventures, alongside “active angels” Tim Draper, Naval Ravikant, Roger Ver, and Barry Silbert.

Beyond these major players, Diar reports that close to 2,000 investors have closed deals with at least one blockchain firm this year — the fifty most active of these have invested in “at least” eight. In terms of investor profiles, 52 percent of investors were not exclusively focused on the crypto and blockchain sector, but sealed their deals as part of a more diverse portfolio.

Lastly, Diar also analyzed the geographic distribution of the VC capital that flows into blockchain, with U.S.-based investors representing the lion’s share at 79 percent, followed by 12 percent from China, and 2 percent from South Korea and Singapore respectively.

Diar’s new report also includes a section on the phenomenon of new banking operations that aim to facilitate the blockchain industry, whether blockchain-exclusive banks built “from the ground up,” banks that integrate fiat and crypto services, or the rising number of crypto-related firms that are securing banking licenses.

As reported earlier today, South Korea’s largest VC firm, Korea Investment Partners (KIP), has invested in its first blockchain startup — one that specializes in harnessing the technology for supply chain management solutions. KIP is known for its investments in high-ranking firms that include Naver — Korea’s largest search engine, as well as owner of the  popular Japanese messaging app LINE — and Korean messaging giant Kakao, among others.

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A Ukrainian legislator has urged parliament during a speech on Monday, October 1 to review his alternative bill on cryptocurrencies that offers to freeze taxes for crypto traders up to 2030.

MP Yuriy Derevyanko, a member of the anti-corruption Movement of New Forces founded back in 2017 by former Georgian politician Mikheil Saakashvili, introduced his version of the bill at the conciliation board of The Verkhovna Rada of Ukraine, the country's unicameral parliament.
"The bill provides tax exemptions for all the participants of crypto market up to 31 December, 2029," Derevyanko stated. He further explained the importance of such a decision for the Ukrainian economy:

"I believe we need to impose a moratorium on taxation of [the crypto] area for the next 10 years. We have to regulate and legalize this segment, which will become an engine for a new economy.”

The alternative bill, registered September 27, offers slightly different definitions for cryptocurrencies, blockchain, mining, and tokens. According to the document, tax holidays will refer to all income from crypto deals both for individuals and entities.



Derevyanko's document opposes the main bill, which several MPs of president Petro Poroshenko's party has put forward earlier this September. Per the above graphic, the main difference between the two bills consists of their approach to taxation.

As Cointelegraph has explained, the first draft offers a five percent tax for individuals and legal entities operating with virtual currency assets, such as coins and tokens. Starting January 1, 2024, the tax for business revenues from crypto will rise up to 18 percent. This, the document states, might help Ukraine draw an additional 1.27 billion hryvnia ($43 million) to the budget annually from 2019-2024.
As Cointelegraph reported earlier, Ukraine has repeatedly expressed its desire to create a national digital currency tied to local fiat (hryvnia).

Ukraine’s draft cryptocurrency legislation also contains regulatory provisions against money laundering, terrorist financing, and other criminal activities.

Earlier in June, Ukrainian police arrested four men who were suspected of running at least six fake cryptocurrency exchanges. Later, the authorities questioned users allegedly deceived by fraudulent exchanges.

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South Korea’s largest venture capital (VC) firm, Korea Investment Partners (KIP), is investing in its first blockchain startup, TEMCO, according to an October 1 press release.
KIP is known for its investments in high-ranking firms that include Naver — Korea’s largest search engine, as well as owner of the  popular Japanese messaging app LINE — and Korean messaging giant Kakao, among others. Both LINE and Kakao have made multiple inroads into the crypto space, with the former launching its own crypto token and exchange, and the latter establishing its own blockchain subsidiary.

According to its official website, TEMCO specializes in supply chain management solutions that use smart contracts on a public blockchain to help enterprises securely track products in an auditable manner, from distribution to eventual consumption. The startup will reportedly launch a token pre-sale in November 2018.

The backing of an Initial Coin Offering (ICO) by KIP comes around a month after Korea’s venture enterprise division controversially decided to place crypto-related business in the same category as organizations that handle bars and nightclub — thus denying enterprises in the space a wide range of benefits, including tax reductions.

Korea, nonetheless, remains a major presence in the crypto space, reportedly having the  third-largest crypto exchange market in the world after the United States and Japan. This spring, the South Korean government revealed a positive reorientation for domestic crypto and blockchain legislation, hinting at plans to make domestic ICOs legal again —- the debate over which has continued this summer.

Cointelegraph reported in July that Korean regulators had pledged to introduce new legislation that would be conducive to blockchain investment, the same month as three Korean ministries were said to be working to produce the final draft of a comprehensive blockchain industry classification scheme for the country.

In August, the country’s finance ministry announced it would be investing around $4.4 billion in 2019 to nurture eight sectors of the domestic economy, including the blockchain sector.
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Chinese cryptocurrency exchange Huobi has responded to accusations it has “colluded” with EOS on “mutual voting” practices, Tuesday, October 2.

In a brief statement, the exchange said an investigation into the allegations which Cointelegraph reported on October 1 was “still ongoing.”

“Based on the initial investigation, there were no financial contracts involved between Huobi and any third party,” the statement reads.

“The investigation is still on-going [sic] and therefore, we seek your patience and co-operation [sic] in this matter.”

On Monday, Block.One, the parent company of the EOS platform, had issued a statement of its own saying it “was aware” several parties had levelled accusations of voting process manipulation at certain participants. Block.One called the claims “unverified.”

“We believe it is important to ensure a free and democratic election process within EOS and may, as we deem appropriate, vote with other holders to reinforce the integrity of this process,” the statement read.

The EOS voting process had previously come under fire from cryptocurrency community figures, among them Ethereum (ETC) co-founder Vitalik Buterin, who had warned about the potential for manipulation last year.

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