Polish Ministries Of Foreign Affairs And Finance Refute Interest In Venezuela’s Petro

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Poland’s Ministries of Finance and Foreign Affairs refuted rumors of Polish interest in trading with Venezuela in the country’s newly-launched Petro[1] coin, Polish news outlet Gazeta.pl[2] reports Friday, Feb. 23.

Venezuelan government-sponsored news outlet TeleSur reported in early February[3] that the new cryptocurrency had found foreign investors, including Poland, who were interested in receiving Petro[4] for food and medicine.

The Polish Ministry of Finance told Gazeta.pl today Poland in fact “did not receive any letter in this matter,” and that given cryptocurrencies are not legal tender in Poland[5], cryptocurrencies are not generally used in trade and service enterprises.

Poland’s Ministry of Foreign Affairs also told Gazeta.pl:

“Poland did not report interest in transactions with the use of Petro cryptocurrencies.”

The Petro’s Initial Coin Offering[6] (ICO) launched on Feb. 20, allegedly bringing in[7] over $735 mln, according to Venezuelan President Nicolas Maduro’s Twitter. No official numbers have yet been released for the Petro ICO.

Denial of interest in the Petro comes on the heels of a broader trend of suspicion toward cryptocurrencies in Poland. The Central Bank of Poland recently admitted[8] to funding a social media campaign against cryptocurrencies. At the same time, the Polish Blockchain Technology Accelerator (PATB) has announced[9] that one of its teams is working on the development of a digitized national cryptocurrency in Poland, the digital Złoty, dPLN.

The developers of the dPLN state they have removed speculative properties from dPLN, are considering linking its value with the Złoty, and have departed from using distributed ledger technology for its transmission. Following this announcement, the PATB lost support from its major patron, the Ministry of Digitization, who stated:

“The Ministry of Digitali[z]ation supports the development of distributed register technology, however, it does not run any projects and research related to cryptocurrency. We would also like to inform you that the Ministry of Digitalization has now withdrawn its patronage for the Polish Blockchain Technology Accelerator.”

Bank Of China Files Patent For New Blockchain Scaling Solution

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The commercial, state-run Bank of China[1], not to be confused with the People’s Bank of China[2], the country’s central bank, has filed a patent with the Chinese State Intellectual Property Office (SIPO) for a solution to scale Blockchain[3] technology systems, according to local news outlet tech.ifeng[4].

The bank originally applied for the patent on Sept. 28, 2017, with a Zhao Shuxiang indicated as the patent’s inventor, but SIPO only released news of the patent on Feb. 23, 2018.

The patent contains a method for compressing Blockchain data that seeks to solve the problem of storage space in new blocks without compromising on traceability and immutability.

As described in the patent, the amount of data stored in in new blocks would be reduced in the following way: when a full-size node receives a compression request from a client, it compresses transaction data from multiple blocks into a single “data block”, which would then be temporarily hosted on a different data storage system.

This data would then be run through a hash function with the data block hash value, and the compression transaction would map the relationship between the compressed block, the data block, and the compression event, which would all be recorded on the Blockchain.

While China has been one of the stricter countries globally in terms of cryptocurrency regulation, having banned[5] Initial Coin Offerings[6] (ICO) and foreign exchanges[7] from operating within the country, the South Korean Finance Minister spoke earlier this month[8] of a need to cooperate with China in the sphere of Blockchain during a meeting with the governor of the People’s Bank of China.

Earlier this week, Chinese multinational PC company Lenovo also filed a Blockchain-based patent[9] for verifying the integrity of physical documents, but with the U.S. Patent and Trademark Office (USPTO), rather than China’s SIPO.

German Research Institute To Use Blockchain For Radio-Frequency ID Sensor Systems

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The Fraunhofer Institute for Photonic Microsystems (IPMS)[1], based in Dresden, Germany[2], intends to use Blockchain[3] concepts for the development of wireless radio-frequency identification (RFID) sensor systems in the logistics sector, according to a Feb. 22 press release[4].

The use of Blockchain solutions for the decentralized storage of data generated by RFID sensors could be made possible in this context through unique approaches to each client. Fraunhofer IPMS develops individual hardware and software solutions for its customers and analyzes their individual requirements using simulations.

Although Fraunhofer IPMS does not yet offer a finished product with Blockchain integration, they will present software solutions for wireless RFID sensor systems that can be extended with Blockchain technology at the Trade Fair for Intralogistics Solutions and Process Management[5] (LogiMat). The event, which will take place between March 13-15, 2018 in Stuttgart, Germany, is the largest European trade fair for the logistics sector.

According to the institute’s press release, Fraunhofer IPMS sees great potential in using Blockchain technology for data management of supply chains in automation and logistics processes and says it could “speed up deliveries, avoid fraud and errors, and reduce scrap and costs.”

Dr. Andreas Weder, team leader at Fraunhofer IPMS, said that storing the data generated by RFID sensor transponders on a Blockchain makes them reliably traceable for all participants in the supply chain:

“Our passive RFID sensor transponders measure physical parameters such as humidity, vibration or temperature and transmit them wirelessly to a reader that also provides the energy.”

The German lobby group Blockchain Bundesverband had said earlier this month[6] that the German government will create a legal framework for regulating Blockchain technologies in a move to “welcom[e] the Blockchain industry” to the country.

Romanian Startup Targets $400 Bln Charity Fundraising Market With New Platform

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A Romanian startup has set out to build a specialized Blockchain-based fundraising platform for philanthropic organizations such as Unicef, Red Cross or Save The Children to improve speed and transparency of payments.

Year-end launch planned

GoHelpFund is harnessing Blockchain[1] and smart contracts, both of which significantly enhance speed and security of payments when compared with older payment systems. It also plans to integrate artificial intelligence (AI) and machine learning capabilities to add innovative features. Its platform, along with the new HELP cryptocurrency, expects to open for business at the end of 2018.

In 2016, Americans alone donated $390 bln to charitable causes, according to the Giving USA Foundation[2]. Worldwide estimates are not available, but the number likely runs into at least tens of billions of dollars more.

Conceived last year by Daniel Tirzuman and his co-founders, GoHelpFund[3] works off Amazon Web Services, and uses the Ethereum cryptocurrency ahead of HELP’s launch. The startup is building a decentralized platform[4] based on Blockchain and additionally tapping AI and machine learning to add features valued by charities.

Machine learning will add new features

Machine learning, for example, will enable real-time detection (RTD) to recognize fraud and other events before they happen automatically. Similarly, AI is to be used for real-time event processing (RTEP), which will prioritize fundraising campaigns. For example, natural disasters will automatically get more attention than some other campaigns in times of need.

The company believes its machine learning and artificial intelligence[5] features will have a big impact on user experience, making it more easy and reliable for people to use the platform and be active within the community.

HELP tokens to bring flexibility and transparency

GoHelpFund’s HELP token is an ERC20 standard Ethereum token and based on what the company calls Advanced Distributed Edge Network (A.D.E.N.), the company’s proprietary Blockchain solution.

According to GoHelpFund, when the company eventually migrates from Ethereum to HELP, with its own Blockchain, it will bring in flexibility to create master nodes and other features. For example, the platform will allow donors to see how their funds are being used through the campaign, bringing a greater degree of transparency.

Donors on the platform will be able to use fiat money and a variety of cryptocurrencies, all of which will get automatically converted to HELP tokens via the exchanges.

GoHelpFund has raised $125,000 from a pre-sale of its tokens. Token sales[6] are scheduled to continue through March. An ongoing bounty program[7] is scheduled to close March 28.

Pump and Dump in Crypto: Cases, Measures, Warnings

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The pump and dump, an age-old scheme to quickly raise the value of a worthless asset and then selling it to reap the profits from the price increase. Not only is the pump and dump illegally under the securities laws[1], but it is also extremely popular in the world of Blockchain technology, cryptocurrency, and digital assets.

How does it work

In a pump and dump scheme, the price of a worthless asset-usually a penny stock with [2]a low market cap-is artificially inflated through well-planned marketing. False statements, misleading statements, a large number of social media posts, co-signs, and other chicanery are used to get the word out that a worthless asset is actually a hot buy that investors do not want to miss out on (the pump).

To support these claims, the price of the worthless asset is increasing rapidly due to the well-planned pump. Once investors get word about the worthless asset and see its price rising rapidly, more investors start to buy up shares of the stock.

This is when individuals who are in on the pump and dump scheme will sell or “dump” the shares of the overvalued asset. These individuals profit from selling the asset at or near its peak for many times more than the price they purchased it at. When they begin to sell their shares of the overvalued asset, the price of the asset tanks and corrects to a more accurate and appropriate valuation.

Internet for pump and dumps

Before the invention of the Internet, pump and dumps were much harder to organize. Individuals had to organize pump and dumps in person, via telephone, or via snail mail. Pump and dump schemes were often organized by “Boiler Rooms[3],” outbound call centers that were known for using dishonest sales tactics like promoting penny stocks to turn a profit.

With the creation of the Internet, it became far easier to execute a pump and dump scheme. These days, individuals converse in chat rooms, via messaging apps, and on Internet message boards to coordinate a pump and dump. With all the venues that the Internet provides to converse with each other, the Commodities Futures Trading Commision (CFTC)[4] has become wary that pump and dump schemes could even sway professional investors into taking on an amount of risk that they did not intend to undergo.

CTFC virtual currency customer protection advisory statement

On Feb. 15, the CTFC released their first Pump and-Dump Virtual Currency Customer Protection Advisory[5] statement.

“Customers should know that these frauds have evolved and are prevalent online. Even experienced investors can become targets of professional fraudsters who are experts at deploying seemingly credible information in an attempt to deceive.”

The advisory even quoted messages from an online chatroom coordinating a pump and dump, 

“15 mins left before the pump! Get ready to buy.” “Five minutes till pump, next message will be the coin! Tweet about us and send everyone the link to telegram (sic) for outsiders to see what we are pumping so they can get in on the action too!! lets (sic) take it to the MOON!!!!!”

In the scheme cited above, the entire pump and dump process only lasted eight minutes.

The CTFC warns consumers:

“Customers should avoid purchasing virtual currency or tokens based on tips shared over social media. The organizers of the scheme will commonly spread rumors and urge immediate buying. Victims will commonly react to the currency’s or token’s rising prices, and not verify the rumors. Then the dump begins. The price falls and victims are left with currency or tokens that are worth much less than what they expected. From beginning to end, these scams can be over in just a few minutes.”

Regulations

As the market for cryptocurrency continues to grow, government organizations give the burgeoning market the attention that it needs to develop. This includes releasing detailed reports like the CFTC Primer on Virtual Currencies[6], holding hearings with Congress[7], and giving consumers all the available information they have to mitigate the chance that the consumer will be susceptible to fraud or manipulation.

Pump and dump schemes are illegal and considered securities fraud by the SEC.[8] In most regulated markets like the London Stock Exchange[9] and the New York Stock Exchange[10], they are illegal as well. The CTFC is even offering a 10-30 percent bounty[11] for any pump and dump whistleblowers who are able to lead the CTFC to monetary sanctions of $1 mln or more.

However, pump and dump schemes aren’t illegal on cryptocurrency exchanges. Cryptocurrency exchanges are not regulated; there is no piece of the legislature about cryptocurrency exchanges. So even though a pump and dump is unethical, it is not officially illegal (yet).

Cointelegraph reached out to anti-money laundering (AML) specialist Joe Ciccolo, founder of BitAML-a company that provides anti-money laundering solutions for digital currency startups. When asked about the legal status development of pump and dumps in the cryptocurrency market, and if it is possible to whistleblow in an unregulated industry, Ciccolo said:

“The CFTC, like other financial regulators, will continue leveraging existing enforcement resources. Whistleblower programs, a common regulatory tool, have generally worked remarkably well at putting crucial and credible information into the hands of investigators. The CFTC has rightfully prioritized consumer education and protection by focusing on detecting and deterring fraudulent activities, such as pump and dump schemes, while not stifling early innovation in the crypto space.”

Case: market manipulation on Bittrex

A well-planned pump and dump could earn investors over 100 percent return on investment. In one case[12], an altcoin pumping group was able to pump a coins price by over 950 percent. At 11:40 a.m. on July 2 the moderator of the chatroom announced that the next pump would take place in 20 minutes on Bittrex. 15 minutes later, the moderator announced that the pump and dump would take place in 5 minutes (12:00 pm). At 12 p.m. the moderator announced the name of the coin, SLS[13], and sent a link to the relevant market on Bittrex. At the start of the pump, the SLS coin was worth .0046 BTC ($11.61 based on July 2 price). At the height of the pump, SLS was worth .0438  BTC ($110 based on July 2 price), and after the dump, SLS was back at .0059 BTC ($14.90).

 Pic1

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Image source: Altcoin Pumping Group 2/2 Telegram Chat

In November of 2017, a Business Insider investigation revealed[14] that traders were coordinating pump and dumps on Bittrex and Yobit via the messaging app Telegram. Shortly afterward, Bittrex issued a statement:

“A general statement about market manipulation tactics:  Bittrex actively discourages any type of market manipulation, including pump groups.  Consistent with our terms of service, we will suspend and close any accounts engaging in this type of activity and notify the appropriate authorities.”

Following the announcement, pump groups on Telegram[15] warned their members that Bittrex would be cracking down on manipulative behavior. One group-Trading signals for crypto-canceled their pump and dumps due to Bittrex’ policy change. Another group-Fake Pump&Dump Hunter[16]-was interested in knowing if Bittrex’s announcement was a scare tactic or if it had actually been enforced. Fake Pump&Dump Hunter requested that any user who had their account suspended by Bittrex get in contact with them.

 

Pic3

Pic4

Image source: Business Insider

Pump and dump groups often have thousands of members. At one point, Trading signals for crypto had over 7,000 members. Some members are professional investors and pump organizers who invested in the coin way before the date of the pump; others are retail investors, who find out which coin is being pumped at the same time the pump begins.

Four CTFC warnings

Although the cryptocurrency industry is maturing and taking the necessary steps to merge with the traditional banking and finance system. Blockchain and cryptocurrency is still in its Wild West phase. Due to a lack of regulation and consumer protections in the cryptocurrency markets, there are still enough opportunities to pull off fraudulent and manipulative schemes like the pump and dump. That is why it is always better to do independent research of the assets you are interested in investing in, and to only take on an amount of risk that allows you to sleep comfortably at night.

To protect investors against manipulative markets, The CTFC’s advisory also gave consumers the following warnings:

  • “ Don’t purchase digital coins or tokens because of a single tip, especially if it comes over social media.
  •   Don’t believe ads or websites that promise quick wealth by investing in certain digital coins or tokens.
  •   Do not participate in pump-and-dump trades; market manipulation is against the law and many participants end up losing money.  
  •   There is no such thing as a guaranteed investment or trading strategy. If someone tells you there is no risk of losing money, do not invest.”

Coinbase Informs 13K Affected Customers Of Imminent Data Handover To IRS

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US-based cryptocurrency exchange and wallet service Coinbase[1] sent an official notice[2] Friday, Feb. 23 to approximately 13,000 of its customers whose information it is legally required to turn over to the US Internal Revenue Service[3] (IRS).

The IRS had initially asked[4] Coinbase in July 2017 to hand over even more detailed information on every one of its then over 500,000 users in an attempt catch those cheating on their taxes[5]. However, another court order in Nov. 2017 reduced this number[6] to around 14,000 “high-transacting” users, which the platform now reports as 13,000, in what Coinbase calls a “partial, but still significant, victory for Coinbase and its customers.”

On Friday, Coinbase told the around 13,000 affected customers that the company would be providing their taxpayer ID, name, birth date, address, and historical transaction records from 2013-2015 to the IRS within 21 days.

Coinbase’s letter to these customers encourages them “to seek legal advice from an attorney promptly” if they have any questions. Their website also states that concerns may also be addressed on Coinbase’s Taxes FAQ[7].

The ongoing legal battle between Coinbase and the US government dates back to November, 2016[8], when the IRS filed a “John Doe summons” in the United States District Court for the Northern District of California.

On Feb. 13, personal finance service Credit Karma released data showing that only 0.04 percent of their customers[9] had reported cryptocurrencies on their federal tax returns so far this tax season.

Three Ways Your ICO Can Overcome FUD in the Market: Expert Take

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In our Expert Takes, opinion leaders from inside and outside the crypto industry express their views, share their experience and give professional advice. Expert Takes cover everything from Blockchain technology and ICO funding to taxation, regulation, and cryptocurrency adoption by different sectors of the economy.

If you would like to contribute an Expert Take, please email your ideas and CV to a.mcqueen@cointelegraph.com[1].

Caution is not always a bad thing. A healthy skepticism prevents people from diving in headfirst into a shallow concept. However, when fear, uncertainty and doubt (FUD) monopolizes voices in new and innovative territories, it can inhibit positive growth. This is currently the case with Initial Coin Offerings (ICOs)[2].

In 2013, when J.R. Willett announced the concept of an ICO[3] – a fundraising system where companies sell their new cryptocurrency tokens in exchange for Bitcoin and Ether – it was immediately met with public skepticism. That skepticism only grew as mainstream voices entered the Blockchain arena to chastise Bitcoin and discredit the work of the crypto community.

Today, ICOs still carry the weight of media FUD. Scams, hacks, misinformation and high-profile cynics[4] are the poster children of ICO and Blockchain worldwide. This prevents positive, impactful and innovative projects from getting the attention they deserve. The cryptocurrency market has a PR problem.

For your ICO to succeed, you need to fight fire with fire. Your company needs to stand out from the growing mass of competition, eliminate skepticism and gain and retain support from key communities. Achieving this requires your own PR strategy.

I meet regularly with people eager to make a splash in the crypto world. I’ve sat through countless pitches and entertained concepts that vary from practical to outlandish. The question I get asked is almost unanimously: “how can I get more project attention and fight FUD.” My answer almost always involves these three concepts:

1.  Have a clear message

If you can’t explain your vision to a 5-year-old, you don’t have a clear message.

About 95% of the companies I talk to have this problem. They are smart people, surrounded by like-minded individuals who use a similar vernacular to explain their solution. By contrast, the majority of ICO investors aren’t Blockchain “experts” and are looking for a concise summary without industry jargon.

Similarly, the mainstream media often has a tenuous grasp on the Blockchain concept. It’s easier for them to demonize a project they don’t understand than to sift through a poorly worded whitepaper.

FUD is a symptom of misunderstanding. Formulate a way to explain your vision in three sentences or less. Strive for as few words as possible.

2.   Proactively engage skeptics and influencers

If you don’t get out in front of skeptics, their voices can eclipse your marketing efforts.

Inaction is one of the biggest detriments to new ICO projects. Blockchain teams often focus on building their platform and forget to build and engage their communities. If you don’t address your public early on in your ICO process, outside voices will hijack the tone and sentiment surrounding your project.

Create a steady flow of information and maintain active social channels that address the media, investors and project enthusiasts. Stay engaged through your entire ICO process and address any FUD[5] with clear, calculated responses.

3.    Show your value

You must move forward with more strength than your skeptics trying to pull you back.

Demonstrated success is the quickest way to curtail the FUD cycle. ICOs that benchmark successes and broadcast wins are ten times more likely to gain and retain support. Unfortunately, many ICOs either overhype “potential” success or fail to announce critical milestones.

In the first example, companies run into trouble when they prematurely announce success or tease a partnership or milestone they have yet to secure. This can destroy community trust when a company fails to deliver. In the second instance, a company that doesn’t trumpet wins will appear stagnant and lose community interest.

Under promise and over deliver. Raise eyebrows in the crypto community by consistently setting goals and then publicly achieving those goals. If you can show success every step of the way, you will have no problem quashing FUD and attracting new audiences to your ICO[6].

The views and interpretations in this article are those of the author and do not necessarily represent the views of Cointelegraph.

Ben Noble, co-founder of MarketBlok, a Blockchain focused marketing company based in Singapore.

Without Mentioning Blockchain, Putin Says That Russia Must Stay Ahead In Technology

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During a meeting with Herman Gref, the president of Russia’s largest bank Sberbank[1], Russian[2] President Vladimir Putin spoke about the importance of not falling behind in Blockchain[3] development.

Sberbank already introduced Blockchain in their document transfer and storage systems by partnering with Russia’s Federal Antimonopoly Service (FAS)[4] in December of last year. The bank is also reportedly soon opening[5] a cryptocurrency exchange in Switzerland.

Gref addressed Putin directly, speaking about what he sees as the need for programs for training professionals in Blockchain due to the sheer size of the industry worldwide. Gref also spoke of a need for “very careful regulation,” not “prohibitions,” in order to promote innovation.

In response, Putin, without specifically mentioning Blockchain, brings up the question of why Russia needs this industry, when “we have everything […] oil, gas, coal, metals of all kinds […] gold, platinum, diamonds, everything!” He then says that the industry is developing well in Russia and has a “good intellectual base.”

Putin then adds that Russia needs its own “burst,” and quotes an analogy given by a former minister of oil of an unnamed Arab country:

“The Stone Age did not end due to the lack of stones, but because new technologies appeared.”

In Putin’s opinion, countries that are late to adopting this new technology, which he never mentions by name, “will very quickly fall under the dependence of the leaders of this development,” which is something that “Russia cannot allow this in any case:”

“We need to take the maximum advantage of these factors […] to guarantee this progress into the future.”

Putin has brought up the idea in the past[6] of Russia launching its own “CryptoRuble,” but its legality and launch is a continuous grey area[7].

More recently, in January of this year, after consulting[8] with Ethereum[9] co-founder Vitalik Buterin[10], Putin suggested launching a new multinational cryptocurrency[11] to be adopted by BRICS and EEU countries to take advantage of Blockchain and smart contracts.

Canadian Diamond Mining Company Hires New CEO, Turns To Blockchain

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Canadian diamond[1] exploration and mining company Lucara Diamond has appointed a new chief executive in a move towards modernizing the diamond industry with Blockchain[2] technologies, the Financial Times[3] reported today, Feb. 26.

The new CEO, Eira Thomas, will lead the company after its recent purchase of Clara Diamond Solutions for $29 mln, or 13.1 mln shares. Clara is a digital platform that utilizes both cloud and Blockchain technologies to “[ensure] diamond provenance from mine to finger,” according to the Nasdaq press release[4].

Lukas Lundin, chairman of Lucara, said,

“We believe that Clara will not only modernise the entire diamond sales process but unlock additional value for all participants across the diamond market.”

Blockchain systems are seeing increased use[5] in supply chain management as they can streamline the process by permanently recording each transaction on the Blockchain, significantly increasing transparency.

Lucara’s turn to Blockchain comes a month after De Beers, one of the world’s largest diamond producers, launched a pilot Blockchain initiative[6] also for tracking a diamond’s supply chain to ensure each diamond is conflict-free.

European Commission Roundtable: Blockchain ‘Holds Promise,’ Investors Must Know Risks

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The European Commission has hosted a roundtable[1] titled “Cryptocurrencies – Opportunities and Risks,” covering the influence of crypto on financial markets and problems arising with Initial Coin Offerings[2] (ICO) Monday, Feb. 26.

The roundtable was chaired by Valdis Dombrovskis, the Commission’s Vice-President in charge of Financial Stability, Financial Services and the Capital Markets Union.

The Commission’s press release described the event as a place for European Union[3] organizations, countries, central banks, academics, and entrepreneurs to “respond to the challenges posed by so-called cryptocurrencies (virtual currencies) and their underlying Blockchain[4] technology.”

The conference was broken up into three themes: crypto and financial markets, investor protection and market integrity, and ICOs.

After the roundtable concluded, Dombrovskis told the press that since Europe has such a small share of crypto trading, which he referred to as a “global phenomenon,” the next step is a discussion of the same topics at the G20 level, echoing the opinions of French[5] and European Central Bank’s[6] officials.

He told one journalist that he would also not exclude the possibility of moving ahead on regulation at an EU level, pending future events in the crypto world.

He added that “Blockchain technology holds strong promise for financial markets,” and that steps must be made to not hinder technological innovation.

Dombrovskis repeated the EU regulators’ previous stance[7] on the risks involved in investing and trading in crypto at the end of his roundtable press debrief, saying that “warnings about those risks to consumers, to investors, must be clear, frequent, and across all jurisdictions.”

Last Friday, Austria’s Finance Minister Hartwig Löger spoke about his idea[8] for basing crypto regulations on those already in place for gold[9] and derivatives, as well as possible pan-European Union crypto regulations on this basis.

A fintech action plan is expected to be presented by the European Commission in early March.