Top Crypto News – 12/04/2018

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The Winklevoss Brothers Just Won a Crypto Patent

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A company owned by Cameron and Tyler Winklevoss, founders of the Gemini cryptocurrency exchange, has been granted a patent for a system that seeks to improve the security of digital transactions.

The application was filed in November and granted on Tuesday by the U.S. Patent and Trademark Office (USPTO). It describes a “system, method, and program product for processing secure transactions within a cloud computing system,” with Andrew Laucius, Cem Paya and Eric Winer named as inventors (neither of the Winklevosses is included on the list).

This system uses a combination of common cryptographic techniques, including hash functions and digital signatures. Figures included in the application explain that the system is intended to provide security in a cloud-based digital asset exchange.

And while it doesn’t spell it out directly, the patent’s language suggests that the proposed system could be used within Gemini’s infrastructure.

“The present invention is an improvement to computer security technology. Computer systems to date have been susceptible to attack, whether the introduction of malicious code or the unauthorized access of information, over external data connections, such as the Internet,” the application explains, adding:

“As computing systems increasingly move to distributed computing architectures, such as cloud computing, external data connections are often necessary to the functioning of the computing system.”

Winklevoss IP, LLC, the legal entity that controls the patent, holds a number of trademarks and five patents, including this most recent one.

As CoinDesk has previously reported, the pace of blockchain and cryptocurrency-related patent filings has risen in recent months. One recent patent, awarded to a company belonging to automaker Ford, suggested that the firm is looking at using the technology to facilitate car-to-car transactions.

Lock image via Shutterstock.
Written by CoinDesk.com

Australia Sets Registration Deadline for Cryptocurrency Exchanges

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Newly implemented regulations from Australia’s financial intelligence agency, AUSTRAC, has mandated domestic cryptocurrency exchanges to register with the authority before mid-May 2018.

In an announcement on Wednesday, the Australian Transaction Reports and Analysis Centre (AUSTRAC) reminded cryptocurrency exchange operators of their obligation for compliance with the authority after new regulations effectively kicked in on April 3. The regulatory laws, the first for Australia’s cryptocurrency sector, were fast-tracked after the Australian Senate passed legislation to that effect in late 2017.

“Effective immediately, DCEs (digital currency exchanges) with a business operation located in Australia must now register with AUSTRAC and meet the Government’s AML/CTF compliance and reporting obligations,” the authority said yesterday.

Notably, it added:

There is a transition period until 14 May 2018 to allow current DCE businesses time to register.

The new rules, AUSTRAC says, will empower the agency’s compliance and intelligence capabilities help crypto-exchange operators to introduce systems that minimize money laundering and terrorism financing risks.

Under the terms of their compliance, crypto exchange operators – once registered – will be required to follow know-your-customer (KYC) norms to establish a customer’s identity, monitor transactions and flag suspicious transactions by reporting them to AUSTRAC. Further, all transactions involving cash over AUD$10,000 will also need to be reported.

“AUSTRAC now has increased opportunities to facilitate the sharing of financial intelligence and information relating to the use of digital currencies, such as bitcoin and other cryptocurrencies, with its industry and government partners,” AUSTRAC CEO Nicole Rose stated.

The new reforms have also been generally welcomed and accepted by the domestic cryptocurrency sector, she added, claiming that regulation “will also help strengthen public and consumer confidence in the sector”.

Australia moved to regulate cryptocurrency exchanges under existing AML and CTF laws in August 2017, following the likes of Japan which introduced its own guidelines for the sector last year.

The Asian nation is home to a thriving cryptocurrency ecosystem following the official recognition with a number of mainstream conglomerates and players in traditional finance confidently moving into the cryptocurrency sector. This is particularly evident with online brokerage Monex purchasing Tokyo-based crypto exchange Coincheck for ¥3.6 billion ($33.5 million) this month, despite the exchange suffering a monumental $530 million crypto theft in January.

Featured image from Shutterstock.
Written by CCN.com

 

BitFlyer Exchange Toughens User Verification Amid Watchdog Scrutiny

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BitFlyer, a major Japanese cryptocurrency exchange, announced Thursday that it will toughen its know-your-customer process after reported criticism from the country’s financial regulator.

According to a company announcement, starting from April 26, users registering online will not be able to send cryptocurrency assets or withdraw Japanese yen until their identity and address have been confirmed with the receipt of a postal letter from the exchange.

Similarly, paying for goods with bitcoin through bitFlyer will also be disabled until users have received a letter that confirms they have passed the firm’s verification process.

The revised rule comes as a response to a report by Japanese media outlet Nikkei earlier on Thursday, which indicated that Japan’s Financial Services Agency (FSA) has raised concerns over what it considers a loosely enforced ID verification process on the bitFlyer platform.

Based on Nikkei’s report, the regulator said the cryptocurrency exchange has made it possible for users to start trading immediately after submitting a photocopy of their ID cards, while the platform has yet to fully confirm and verify users’ information. As such, the financial watchdog is concerned that the platform could be used for money laundering activities.

Although it denies being careless in complying with know-your-customer rules, the exchange said it is cooperating with the FSA to strengthen its existing anti-money laundering measures.

The move comes at a time when the Japanese regulator has been scrutinizing domestic cryptocurrency exchanges regarding their anti-money laundering and business registration compliance.

Just yesterday, the FSA issued an administrative penalty that ordered Japanese trading platform Blue Dream, which is still in the application process for business registration with the FSA, to suspend its operations until June 10.

The FSA said the firm had violated customer protection measures by soliciting investors for its own token, “BD Coin,” while not making it known to investors how the price of the token is determined.

The order came just days after the watchdog issued two other administrative penalties last Friday, similarly barring two exchanges from operation for two months.

FSA image via Shutterstock
Written by CoinDesk.com

Philippines Regulator Issues Warning to Cloud Mining Participants
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Philippines Securities and Exchange Commission Issues Warning Against Cloud Mining Operations and Contracts

Philippines Regulator Issues Warning to Cloud Mining ParticipantsThe Philippines financial regulator has issued a warning to cloud mining operations promoting this business model without registering with the SEC. Cloud mining operations involve a contract of pre-purchased hashpower from a remote mining operation, and users buy the contracts for a lifetime or a limited amount of time. Cloud mining users then reap the benefits of the pool’s mining revenue if the operation is profitable and if it is not contracts can break even or suffer from losses. The SEC explains that an initial investigation has shown numerous local and foreign cloud mining companies are soliciting these contracts to citizens residing in the Philippines.

Cloud Mining Operators and Agents Can Face Up to 21 Years in Prison

According to the regulator these contracts promise to pay the investor daily or weekly mining proceeds and these unregistered firms also affiliate commissions for every recruit that registers. Due to this business practice, the SEC states that Under Rule 26.3.5 par. 4 of the 2015 Securities Regulation Code these sales are defined as investment contracts. Using the Howey Test the SEC explains the results confirm that these investments are securities.

“Since this scheme involves the sale of securities to the public, the SRC requires that the said securities offered are duly registered and that the appropriate license and/or permit to sell securities to the public are issued to the corporation and/or its agents, pursuant to the provisions of Section 8 of the SRC,” the Philippines SEC emphasizes.

The warning further states, “Likewise, those who act as salesmen, brokers, dealers or agents of these companies in selling or convincing people to invest in the investment scheme being offered by these cryptocurrency mining companies including solicitations and recruitment through the internet without the necessary license or authority from the Commission may likewise be prosecuted.”

[Offenders] will be held criminally liable under Section 28 of the Securities Regulation Code and penalized with a maximum penalty of twenty-one (21) years of imprisonment or both pursuant to Section 73 of the SRC.

Philippines Regulator Issues Warning to Cloud Mining Participants

The Philippines Regulator Says the General Public Should Stop Investing in These Investment Activities

The regulator implies operations that invite and recruit this type of activity without registration will be penalized in accordance with the Supreme Court decision mandated in 2014. Further, the SEC warns the public to “stop investing” in cloud mining contracts with a statement that highlights it’s warning in capitalized and bold lettering:

In view thereof, the public is hereby advised to STOP INVESTING in these kinds of unregistered investment activity and to take the necessary precautions in dealing with these cloud mining companies.

The Philippines government is not the only group of regulators looking to stop cloud mining operations due to securities laws. Last month news.Bitcoin.com reported on how the Attorney General of South Carolina served a cease and desist order to Genesis Mining. The state of South Carolina has also deemed mining contracts to be securities, and plans to prosecute unregistered entities as well.

Written by Bitcoin.com

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