Bitcoin Tracker: Denouement?

Bitcoin prices rose relatively steadily this past week, overcoming investor skittishness seen the week prior when Chinese regulators doubled down on bitcoin exchange investigations.

While bitcoin’s value hasn’t fully recovered from the fall on Feb. 9 and skirted around the $1,000 mark for much of last weekend and into early trading at the beginning of this week, the past two days have seen a bit of rallying.

Thursday’s (Feb. 16) trading opened at just over $1,009. By the afternoon, bitcoin had breached $1,030. At the time of writing, bitcoin’s value had hit $1,038.97, up 2.96 percent from the day’s open and trending upward still. Bitcoin’s market cap sat at $16.8 billion.

Prices rose even as bitcoin’s largest Chinese exchange joined the ranks of its counterparts, announcing that it will halt bitcoin and other cryptocurrency withdrawal capabilities for one month as part of an effort to combat money laundering at the request of the People’s Bank of China.

Data from Bitcoinity indicates a sharp reduction in trading volume on Chinese exchanges over the last 30 days, spurred by exchange policy changes requested by the People’s Bank of China (PBoC).

In a company statement, BTCC wrote: “After the upgrade of the industry and the completion of the audit system, the bitcoin and litecoin currency will be back to normal. If the system upgrade can be completed ahead of time, all business will return to normal immediately.”

BTCC anticipates the upgrades will be complete on March 15. Prior, BTCC had announced that its upgrade would only take 72 hours. Only time will tell whether these exchange upgrades characterize a denouement or the calm before the storm in China.

In bitcoin investment news, the venture arms of Mizuho Financial Group and Sumitomo Mitsui Financial Group have reportedly joined a $1.75 million funding round for bitFlyer, the largest bitcoin exchange in Japan.

Mizuho and Sumitomo Mitsui have joined Mitsubishi UFJ Financial Group as bitFlyer stakeholders. The banks’ interest in bitcoin and blockchain could reportedly be linked to a desire to decrease spending on international wire transfers, according to a report from Nikkei Asian Review.

Japanese regulations currently limit Japan’s banks to stakes in non-financial companies of 5 percent or less, said Nikkei, though major banks have largely embraced FinTech developments like blockchain technology. But the tide is turning, and the stake limitation regulation could be changed within months.

In the U.S. and Japan, hedge funds are betting that the price of bitcoin will go up. Reports are saying hedge funds have started buying, or offering to buy, claims from former Mt. Gox account holders. Creditors have claimed hundreds of millions of dollars in outstanding claims since Mt. Gox entered bankruptcy.

In Feb. 2014, Japanese bitcoin exchange Mt. Gox filed for bankruptcy after $500 million worth of bitcoin went missing. Around that time, bitcoin’s value plummeted from its all-time high around $1,200 in Dec. 2013 down to just over $200 by early 2015.

None of the over 24,000 claimants anticipate regaining more than a quarter of the lost bitcoin in the form of cash — the payout will eventually come all from bitcoin. Hedge funds are making bets that the price of bitcoin will increase, earning them a fortune — eventually.

The vast majority of the missing bitcoin have yet to be found. Mark Karpeles, Mt. Gox CEO, is awaiting criminal trial in Japan.

Another trial involving bitcoin began today in Manhattan federal court. Software engineer Yuri Lebedev and New Jersey pastor Trevor Gross are facing corruption and bribery charges. The two are alleged to have played parts in facilitating an illegal bitcoin exchange business out of a small credit union to evade bank scrutiny.

Gross allegedly accepted bribes, including a $150,000 donation to the church, said Reuters, in exchange for enabling unlicensed bitcoin exchange to take over the Helping Other People Excel Federal Credit Union housed in Gross’ church.

The trial follows an investigation into a data breach that JPMorgan Chase & Co. disclosed in 2014. The breach exposed over 83 million accounts, leading to charges against nine individuals, including the owner of and operator Anthony Murgio.

Murgio pled guilty on charges of conspiring to use the scheme to hack companies, including JPMorgan Chase. Murgio faced charges on three counts, including conspiracy to commit bank fraud and operate an illegal money transmitting business.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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