BitTorrent creator Bram Cohen has taken over as CEO of his current company, Chia Network, CoinDesk has learned. Co-founder Ryan Singer has stepped away from the company to focus on family priorities.

Cohen is viewed as a pioneer of the decentralized internet for creating the BitTorrent filesharing protocol. In August 2017, he left BitTorrent to found Chia, an alternative to bitcoin created to be a less energy-intensive cryptocurrency.

While the company has stayed largely under the radar since announcing itself, it’s backed by some of the most closely watched investors in cryptocurrency.

According to Crunchbase, Greylock Partners, Naval Ravikant and Andreessen Horowitz have all backed the young company, which has raised $3.4 million so far. BitTorrent, is now wholly owned by Justin Sun’s Tron, a negotiation that required Cohen, as a major shareholder, to play an active part.

Former CEO Singer confirmed to CoinDesk he’s not currently working at Chia. A spokesperson for the company also confirmed the transition, adding that current CFO and general counsel Mitch Edwards will take on existing business development relationships.

According to his LinkedIn page, Edwards has had a long career in technology, including a stint in similar roles at BitTorrent and Core Scientific. He also served for a time as acting CEO of Overstock.com, one of the first well-known companies to accept bitcoin.

Chia describes its cryptocurrency as “enterprise-grade.” It refers to its consensus model as “farming” rather than “mining,” in order to distinguish it from more energy intensive forms of securing crypto networks.

Since October, Chia has been testing its approach by running optimization contests with its community and open-sourcing the best implementations. The company initiated its second contest in April.

Bram Cohen image via CoinDesk archives

Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

“Privacy is dead. Get over it.”

We hear that refrain a lot. So often, in fact, that it has (almost) become accepted wisdom for how the digital age must evolve. Sure, there’s concern about the relentless accumulation of data about our online lives. There are even some legislative efforts to hold it back, most notably in Europe.

But there’s an all-too common perception that such efforts are doomed, that the encroachment into our private lives can’t or shouldn’t be impeded. It’s a view that’s either framed by a glass-half-full position that the benefits of the Fourth Industrial Revolution outweigh the costs of lost privacy, or by its glass-half-empty alternative: that the data machines of our global economy can’t be stopped whether we’d like them to or not.

Yet the irony is that the torrent of information delivered by these machines frequently includes new items that make you stop and question this pervading fatalism. They remind us that lives are at stake, that we must take concrete measures to protect the private realm.

This Twitter post by Quartz reporter Mary Hui was one such item:

The setting, of course, is Hong Kong, where hundreds of thousands of people took to the streets last week to protest changes to extradition laws that many believe would open a back-door to mainland Chinese judicial oversight. The behavior shown here reflects fears that Beijing is already, in effect, using a backdoor to surveil and control Hong Kong’s citizens, in this case via payments technology. On Saturday, Hong Kong chief executive Carrie Lam announced that the extradition bill would be suspended, according to the New York Times.

Up until now, the Octopus card has been mostly hailed as a success story for the Hong Kong economy. The contactless stored value card, introduced by the Mass Transit Railway system just three months after Chinese sovereignty over the former British colony territory was restored in 1997, has evolved from simply a multi-ride MTR ticket into a widely accepted method of payment around the city. And by reducing the costs that banks impose on credit card payments, it has helped lubricate commerce in Hong Kong.

That was all fine until people began to realize that the Octopus network could also be a state surveillance tool, a concern that was, naturally, heightened by the ongoing encroachment of Chinese governance in Hong Kong’s affairs. So, as outlined in a follow-up report from Hui, many of the protesters resorted to the obscurity of cash-purchased MTR tickets instead of using their card. In fact, as others reported, many also went “dark” on social media, foregoing digital tools that had until recently been viewed as empowering the protest movement.

In a response to Hui’s post, my fellow CoinDesk advisory board member Dovey Wan showed how these actions in Hong Kong must be understood in the context of current digital life on the mainland. There, the pervasive use of mobile payment apps such as Tencent’s WePay and Alibaba’s Alipay has turned China into a virtually cashless society, one that has also given rise to losses of privacy and alternative workarounds to limit that loss:

Privacy as imperative for human dignity and economics

I’ve written elsewhere about the dangers of cashlessness if digital payment systems don’t respect privacy. What’s at stake is the fungibility of money itself. But this Hong Kong-versus-China story goes to something more fundamental: the protection of human free will, which also happens to matter enormously to the global economy.

A desperate desire to preserve this fundamental right is what drew the masses into the streets last week. They know of the “Black Mirror” implications of China’s “social credit” program for tracking and scoring individuals’ digital activity, which the State Council last week identified as a vital government objective. But while the protesters may not have expressed it this way, they were also fighting to preserve Hong Kong’s vital role in international commerce.

When Deng Xiaoping’s “One Country, Two Systems” principle defined how Hong Kong would maintain its own economic and political administration after the handover, it was an implicit recognition that property rights, freedom of the press and other basic rights were integral to the territory’s economy, which China had a strong interest in sustaining.

Such assurances then became critical to Hong Kong’s continued status as Asia’s financial hub. They meant the world’s banks could maintain their thriving regional headquarters inside the territory’s glittering office towers, allowing it to function as a kind of East-meets-West transition point. Banks and their clients could do business with China, but enjoy Western legal protections. Trade could thrive.

Since then, the formation of special economic zones in booming mainland cities like Shenzhen and Shanghai have drawn banks and other foreign companies into China and have slightly diminished Hong Kong’s clout as a financial hub. Nonetheless, with a trade war growing between the U.S. and China, Hong Kong’s politically and economically liberal status is as important as ever.

This is as much in China’s interest as the West’s. As China asserts its international influence through its massive Belt and Road Initiative, for example, we can assume that companies from that scheme’s 60-plus other countries will resist submitting to Chinese judicial oversight.

Hong Kong’s legal framework, with its proven respect for property rights, offers a compromise. (The territory was deliberately cited as the anchor jurisdiction for the Belt and Road Blockchain Consortium, which Pindar Wong, another CoinDesk advisor, founded to lay out a Belt and Road framework for arbitrating cross-border disputes over smart contracts.)

And while the bill itself has been delayed (but not withdrawn), if hardliners have their way in Hong Kong, it could ultimately set back the initiative and constrain global trade itself.

Hold the line

But let’s bring this all back to human beings, money and technology.

While we can debate, as four Consensus panelists did last month, whether a fundamental human right to transact exists, we can all agree that economic exchange underpins society and that, therefore, hindering it holds us all back. Orwellian digital surveillance is a particularly powerful hindrance. We must resist it.

This is why the pro-privacy principles that underpin early cryptocurrency ideas matter. It’s why coins such as Zcash and Monero, which aim to overcome some of bitcoin’s privacy limitations, are important. And it’s why other new pro-privacy initiatives, such as those enabled by secure multi-party computation, should be encouraged. Its why we should oppose over-reach by regulatory bodies like the Financial Action Task Force.

Above all, it’s why we must support Hong Kong’s protesters. There, but for the grace of God…

Hong Kong demo via Lewis Tse Pui Lung / Shutterstock.com

Noelle Acheson is a veteran of company analysis and a member of CoinDesk’s product team. The opinions expressed in this article are the author’s own.

The following article originally appeared in Institutional Crypto by CoinDesk, a free newsletter for institutional investors interested in cryptoassets, with news and views on crypto infrastructure delivered every Tuesday. Sign up here.

Justin Sun, founder of the Tron blockchain, has paid $4.75 million for the privilege of having lunch with legendary investor Warren Buffett.

News outlets around the world picked up this news, trumpeting it as yet another example of how ridiculous the crypto sector can be.

The gesture is attention-grabbing, true, and not just because $4.75 million is a lot to pay for a meal and a couple of hours of someone’s time. It’s also worthy of a jaw drop given Buffett’s public opinion of bitcoin: “probably rat poison squared” is one of his more colourful descriptions.

However, the real event here is being overlooked. Thanks to Sun’s largesse, two extremes of the current investment landscape will sit at the same table and talk to each other. This is more significant than most of us realise.

A rich buffet

First, let’s look at the extremes that these two ambassadors represent.

Warren Buffett is CEO of Berkshire Hathaway, a U.S.-based conglomerate with over $700 billion in assets, including a handful of large enterprises in insurance, transport and consumer goods, a portfolio of minority holdings in household names such as Coca Cola and Wells Fargo, a sizeable equity portfolio, and over $110 billion of cash equivalents.

One of the richest men in the world, Buffett made his fortune investing in solid companies with definable markets and tangible profits. He has often said that he doesn’t invest in businesses he doesn’t understand, and it wasn’t until 2011 that he took his first stake in a tech company, IBM, a position that did not do well. In 2017, he bought shares in Apple, which now accounts for the largest position in his equity portfolio. And last month, he revealed a small holding in Amazon.

At the other end of the table, we have Justin Sun, an experienced entrepreneur and former Ripple representative, who has built a large ecosystem around a global entertainment platform based on a distributed storage blockchain. Not exactly in Buffett’s wheelhouse, especially since the main use case so far seems to be for gambling, something Buffett has spoken out against in the past.

Tron has been criticized for its outlandish publicity stunts, questionable governance and even plagiarism. In spite of that, however, the network’s token TRX has amassed a liquid market cap of over $2 billion, placing it in the top 10 of crypto assets.

Can you think of two more different lunch partners?

Round table

Now let’s pick our jaws up off the floor and look at what this meeting represents.

On the one hand, it’s a master publicity stunt for Tron and could well end up being cheap at the price. Sun’s name has since graced headlines in mainstream press around the world. While the tone of the reporting may be of incredulity and perhaps even scorn, his name has appeared in the same sentence as Buffett’s in every single article. The two are now associated in the minds of not just investors who read the financial press, but also of a good part of the world’s population.

On the other hand, it’s also good publicity for Buffett, not that he needs it. Affectionately referred to in many outlets as “America’s favorite capitalist,” Buffett has come under criticism recently for his underperformance of the S&P500 over the past 10 years, in spite of handsome outperformance for the previous 30, and for having totally missed the tech boom.

With this lunch, the proceeds of which will go to charity, Buffett has shown himself to be gracious and generous. Several well-known commentators tut-tutted that they wouldn’t want to be in his shoes, but Buffett issued a public statement through a spokesperson saying that he was looking forward to the opportunity. Buffett is far from stupid and may well be intrigued by the chance to hear about a totally foreign concept from one of its most high-profile promoters.

This brings us to where this meeting might lead.

Take out

No-one expects Buffett to emerge from the meal a converted crypto evangelist. If he has struggled to understand tech companies (as he puts it) and their focus on revenue growth at the expense of profits, then it’s very unlikely he will appreciate the value in a new type of asset that has no tangible backing, no defined governance and no established income streams.

Nor will it produce a Buffett-backed investment in crypto, even as an experiment. Berkshire Hathaway is a public company and its annual general meeting is a massive event, with over 40,000 people travelling from far and wide to question the board on their investment decisions. Imagine them having to justify putting shareholders’ money into “magic internet beans.”

What’s more, Buffett has in the past highlighted how hard it is to find viable investments with so much money on hand. The number of listed equities in which he could feasibly invest is limited to around 100, simply because of liquidity concerns and operational considerations.

With over $700 billion of assets under management and over $100 billion of “dry powder” (cash that needs to find a profitable home), even a $1 billion investment that produces a 500% return in one year won’t be enough to “move the needle” on the portfolio’s overall performance. Smaller investments, no matter how enticing, are not worth the hassle. And a larger investment in even the most liquid of crypto assets would send the market reeling – not something a smart investor would do.

Leave a tip

The ideal outcome of the lunch is actually the most likely: that Buffett is less dismissive of the concept of crypto assets than before.

This is likely because Buffett recognizes that he has made mistakes in dismissing entire sectors before. “We blew it,” is how he explained his lack of tech investments so far. Given his personal emphasis on lifelong education, we can expect him to at least listen to Sun.

And it won’t just be to Sun. The entrepreneur’s bold statements, confusing business strategy and apparent lack of concern for regulatory issues (see the interview our editor-in-chief Pete Rizzo did with him on the main stage at Consensus 2019) will most likely mean that Buffett won’t take him very seriously. But Sun is allowed to invite seven other guests and will hopefully choose ones that can explain crypto assets’ role in the evolution of finance with clarity and sobriety. Virtually all of Crypto Twitter has been jostling for position.

Sun is likely to choose well, since association with leading crypto thinkers is part of the stunt. While the rest of us will fantasize about being a fly on that wall, we can be fairly confident that the conversation will be both dense and conceptual.

We can also marvel at the genius of the idea. Whatever you may think of Sun, Tron and the outlook for decentralized entertainment, there is no way that this move doesn’t help the crypto sector. Worst case, Buffett is unmoved and continues to think bitcoin is a “delusion.” From what I gather, his opinion could not go lower than it already is.

Best case, Buffett emerges with an acknowledgement, however reluctant, that maybe there’s more to this than he realized. That would send a strong signal to institutional investors everywhere that dismissal without at least some investigation is short-sighted and foolish.

Total victory would be for Warren Buffett to publicly recognize that he doesn’t understand enough about cryptocurrency to have an informed opinion… yet.

Warren Buffett image via Krista Kennell / Shutterstock.com

A number of South Korean cryptocurrency exchanges have been forced to update their terms and conditions to accept liability for potential hacks and service issues.

According to a report by the Yonhap News Agency, South Korea’s antitrust watchdog, the Fair Trade Commission, said Monday that five exchanges in total had made the change after it issued a corrective recommendation.

Bithumb, an exchange that has been hacked twice in a year, is included in the five exchanges, the report says. Last June, the platform lost roughly $31 million in cryptocurrencies, and, in May 2019, a possible insider job saw around $20 million in the company’s holdings of XRP and EOS disappear.

Previously the exchanges’ T&Cs had stated that they would not compensate users if not found to be willfully or grossly negligent.

After it’s 2018 hack, Bithumb pledged to refund users that lost cryptos, despite its T&Cs.

In January, only a third of inspected cryptocurrency exchanges got a full pass in a government security audit.

At the time, several government agencies inspected a total of 21 crypto exchanges from September to December 2018, examining 85 different security aspects. However, only 7 – Upbit, Bithumb, Gopax, Korbit, Coinone, Hanbitco, and Huobi Korea – cleared all the tests..

South Korea image via Shutterstock

The Takeaway

Cryptocurrency mining giant Bitmain is locked in a legal battle with three former employees who started a rival mining pool.

Bitmain, the owner of BTC.com, the world’s top bitcoin mining pool by hash rate, is suing the co-founders of Poolin, the seventh-largest pool, for allegedly violating a non-compete agreement – and it’s demanding $4.3 million in damages from one of them.

For their part, the three Poolin co-founders say they were no longer bound by the non-compete, since it was Bitmain that invalidated their contracts for failing to pay compensation on time as agreed.

The case offers a rare window on the inner workings and employment practices of Bitmain, one of the blockchain industry’s largest and most powerful companies.

Bitmain makes most of its money from selling mining equipment, according to financials disclosed during the firm’s abortive attempt to go public. But it also operates mining pools, essentially software products miners use to split rewards. This service accounted for $43.2 million of Bitmain’s revenues in the first half of 2018, the most recent period for which data is available, compared to $2.7 billion of hardware sales during the same period.

There are six lawsuits pending in the Beijing Haidian District court. The three Poolin co-founders –  CEO Zhibiao Pan; COO Fa Zhu; and CTO Tianzhao Li – each sued Bitmain preemptively, seeking to be released from the non-compete.

Bitmain, in turn, countersued each of them, claiming they caused significant losses to the company after leaving by operating a directly competing pool. Aside from seeking damages, Bitmain asked the court to order the Poolin executives to resume honoring the non-compete agreement.  

The dispute has largely escaped public notice, but video footage recently became available of an April 30 hearing where the two sides made their respective cases. The video only showed discussion of the case between Pan and Bitmain. As such, exact details regarding the other two former employees were not clear until now.

The birth of BTC.com

The main dispute in these cases boils down to the roles the three Poolin founders played in Bitmain’s flagship mining pool BTC.com, and the non-compete agreements they signed when they decided to leave Bitmain.

In a WeChat post written by Zhu and published by a Chinese crypto media outlet in January commemorating bitcoin’s 10-year anniversary, he briefly recounted the trio’s work at Bitmain.

Zhu wrote that back in 2015, the three – while still focusing on Bitmain’s original mining pool, Antpool – proposed to launch BTC.com as a parallel service within Bitmain.

The idea was not initially supported by Bitmain, Zhu wrote, and the three had to develop and roll it out on their own using Pan’s own capital at the beginning. In 2016, Pan open-sourced the code of BTC.com, which helped lower the threshold for anyone that’s interested in launching a mining pool business.

The three collaborators left Bitmain around mid-2017. Under the non-compete agreement, Bitmain would pay monthly compensation to Pan after his departure of about $2,780 for 24 months, and in return, prohibit him from specifically operating a bitcoin mining pool. The compensation for the other two under such agreements was not clear from the court video.

After their departure from Bitmain, Pan, Zhu and Li launched Poolin as mining pool for multiple cryptocurrency assets in November 2017. They didn’t launch a pool service for bitcoin until July 2018, when they mined Poolin’s first block of the largest cryptocurrency by market cap.

It has since grown into one of the largest bitcoin mining pools. Based on facts agreed on by both sides of the case and presented to the court, as of Feb. 14, Poolin was the third biggest operation by hash rate in the world, after BTC.com and AntPool. All told, miners connected to Poolin had mined 26,825 bitcoin, worth $220 million at today’s prices.

Notably, Poolin’s share of the hash rate has dropped since then to about 8.2 percent, and its rank has fallen to No. 7, based on the current distribution of bitcoin’s network computation.

Bitmain cries foul

Subsequently, Bitmain alleged that such conduct violated the non-compete agreement, and demanded that Pan return all the paid compensation, as well as a fine of $667,000 for reneging.

Further, Bitmain’s lawyers argued at the hearing that the revenues Poolin generated from mining the 26,825 bitcoin should be considered a profit made by violating the agreement, which should be paid back as a loss to Bitmain.

“Based on the agreement, if it’s difficult to calculate all the direct and indirect loss [for Bitmain due to Poolin’s violation], then the loss should be calculated based on the profits made by the violating party,” one of the lawyers said.

“As of Feb. 14, the total profits for Poolin would be 26,825 bitcoin times 4 percent, which was their handling fee, and times bitcoin’s price at the time, which was 24,518 yuan [$3,500],” the lawyer argued.

That, added to the alleged fine, would amount to more than 30 million yuan, or about $4.3 million.

Poolin pushes back

But lawyers representing the Poolin founders argued to the court that Pan was not obligated to honor the agreement and thus should not be ordered to pay damages.

Pan’s lawyers said in the hearing that Bitmain failed to pay Pan the agreed-upon compensation on time, citing lines from the agreement that if Party A (Bitmain) did not pay the compensation within a month since Party B (Pan)’s departure, it would mean Party A voided its obligation.

Further, Pan’s lawyers argued the transaction fee Poolin received doesn’t necessarily translate to profits of the company because until the date of the hearing, the firm had not turned a profit. In addition, the fact that Poolin successfully mined 26,825 bitcoin also does not necessarily mean it would be a loss for BTC.com, the lawyer said.

“There are a lot more bitcoin mining pools in this network. It’s not just Poolin v.s. BTC.com. Even if Poolin didn’t operate its bitcoin mining pool, it does not necessarily mean Bitmain will be able to mine those coins.” the lawyer argued.

So far, it’s not yet clear from the public record whether the court has made a judgment or when it will. The judge asked at the end of the hearing if there was a way for the two parties to settle the case. Lawyers from Bitmain declined to discuss that at the court and suggested waiting until after the hearing adjourned.

Bitmain declined to comment or provide further clarification on the status of the cases. Poolin executives did not respond to CoinDesk’s inquiries by press time.

This is not the first time Bitmain has had a legal dispute with former senior executives. In 2017, it sued Zuoxing Yang, a former Bitmain chip design director who left to launch Bitewei, a rival mining equipment manufacturer, over patent rights infringement.  

Bitmain initially demanded damages of 26 billion yuan, or $3.8 billion, but later reduced the claim to $380,000. In 2018, the court in Xinjiang that oversaw the case dismissed Bitmain’s complaint after Yang successfully revoked Bitmain’s patent over the technology in dispute.

Hearing image via Beijing Haidian District Court

The price of bitcoin (BTC) hit a 13-month high above $9,300 on Sunday.

The leading cryptocurrency by market capitalization rose to $9,381 at  05:55 UTC – the highest price since May 10, 2018, according to CoinDesk’s Bitcoin Price Index.

BTC was last seen trading at $9,250 representing 6.4 percent gains on the day. On a month-to-date basis, the cryptocurrency is up 8 percent.

More than $19 billion worth of bitcoin has been traded across cryptocurrency exchanges in the last 24 hours, according to Messari data. Meanwhile, major exchanges included in the calculation of Bitwise’s “real” bitcoin trading volume are currently reporting the 24-hour volume figure at $867,697,751.

With the price rise, Bitcoin’s dominance rate, or its share of the total cryptocurrency market, has ticked higher to 57.1 percent from lows near 55 percent see on Friday.

The bitcoin price rally is boding well for the broader market. At press time, litecoin is up 2.3 percent on a 24-hour basis. Names like ethereum’s ether token, XRP and bitcoin cash are up 4 percent, according to CoinMarketCap.

Meanwhile, EOS is the best performing top 10 cryptocurrency of the past 24 hours with 7 .4 percent gains.

However, on a seven-day basis, litecoin is leading the top 10 cryptocurrencies with 18.29 percent gains followed by bitcoin, which has appreciated by 17.20 percent.

Looking forward, BTC may rise further toward the next major resistance at $10,000, as long-term technical studies are biased bullish. For instance, bitcoin’s 50- and 100-candle moving averages on the three-day chart look set to produce a bullish crossover – a sign of bull market momentum. Back in October 2015, the same cross marked the start of a long-term bull market.

Notably, with a move to 13-month highs, the cryptocurrency has retraced nearly 38.2 percent of the sell-off from December 2017 highs to December 2018 lows, as seen in the chart below.

Weekly chart

BTC’s sharp rise from $7,500 to levels above $9,300 has invalidated the bearish doji reversal confirmed by last Sunday’s UTC close below $8,000. As a result, the path of least resistance is to the higher side and prices could cross the 38.2 percent Fibonacci retracement hurdle of $9,442.

However, a minor pullback to $8,000 could be seen before a break above $9,442, as the bearish divergence of daily trading volumes discussed on Friday is still valid. Further, the widely tracked relative strength index is reporting overbought conditions with an above-70 print on the hourly and 4-hour charts.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via CoinDesk archives; charts by Trading View