The world’s largest cryptocurrency exchange Binance is moving to boost compliance and data security through a new deal with Medici Ventures portfolio firm IdentityMind.

IdentityMind announced on Tuesday that it has partnered with Binance to “improve existing data protection and compliance measures” for the exchange’s global operations.

IdentityMind provides cryptocurrency exchanges a “real-time” platform to comply with know-your-customer (KYC) and anti-money laundering (AML) regulations worldwide to prevent fraud, according to the announcement. The startup helps cryptocurrency exchanges with client onboarding, transaction monitoring and case management solution.

IdentityMind CEO and president Garrett Gafke said:

“Our risk and compliance platform powered by a patented digital identities engine meet the scale demands of Binance’s global operations while providing a highly accurate system for assessing any global risk factors from outside entities for transactions.”

The news appears to indicate a shifting stance from Binance, which has previously avoided the strict compliance route chosen by other top exchanges such as Coinbase.

Binance’s KYC processes are “the industry’s least rigorous,” said a report from Bloomberg last year. Users only need an email address to open trading accounts with the exchange, the report said, adding that this “level of anonymity” makes it hard to track money laundering and market manipulation.

Since then, however, Binance has been making efforts to raise its compliance game. Back in October, the exchange partnered with cryptocurrency compliance and investigation software provider Chainalysis to monitor cryptocurrency transactions in real-time and potentially avoid any criminal or illicit activity.

It also, the following month, collaborated with Refinitiv, formerly the financial and risk business division of Thomson Reuters, for an automated KYC solution.

Binance logo image via Shutterstock 

Luxury brand conglomerate LVMH, owner of the iconic Louis Vuitton label, is preparing to launch a blockchain for proving the authenticity of high-priced goods, CoinDesk has learned.

Code-named AURA, the cryptographic provenance platform is expected to go live in May or June with Louis Vuitton and another LVMH brand, Parfums Christian Dior. It will then be extended to LVMH ‘s other 60-plus luxury brands, and eventually those of its competitors.  

LVMH has enlisted a full-time blockchain team who have been in stealth mode for over a year, working closely with ethereum design studio ConsenSys and Microsoft Azure, according to two people familiar with the project.

AURA has been built using a permissioned version of the ethereum blockchain called Quorum, which is focused on data privacy and was developed by JPMorgan.

Neither LVMH nor its partners ConsenSys and Microsoft would comment ahead of the project’s official launch. But a source involved in the build told CoinDesk:

“To begin with AURA will provide proof of authenticity of luxury items and trace their origins from raw materials to point of sale and beyond to used-goods markets. The next phase of the platform will explore protection of creative intellectual property, exclusive offers and events for each brands’ customers, as well as anti-ad fraud.”

White label

Stepping back, LVMH controls over 60 luxury brands including many well-known names like Dior, Dom Pérignon and Hublot. The group reported revenues of $53 billion in 2018.

But it’s not the first to propose an authenticity-tracking blockchain; there have been other luxury provenance platforms and mini consortia, such as Arianee or Vechain.

According to the source involved in the project, LVMH questioned why it would allow third parties to position themselves between its brands and their partners – especially since blockchain is supposed to be a technology for eliminating intermediaries.

The source added:

“This should be done in the form of an industry consortium rather than a third party actor coming into the marketplace.”

As such, LVMH intends to offer the service in a white-label form to other brands including the group’s competitors. So rather than creating an app of some kind, AURA will run behind the brands using it.

“So if you are a customer of a luxury brand, you are not going to see AURA; you are going to see the Louis Vuitton app or the app of another luxury brand,” the source explained.  

Equal footing

This all sounds great – in theory. But it can be tricky getting your competitors onto a blockchain platform, particularly if you happen to be as big and influential as LVMH.

To avoid the sort of problems experienced by the blockchain venture between IBM and Maersk, LVMH will donate all intellectual property (IP) to a separate entity and that entity, in turn, will be owned by the participating brands, said the source, who added,

“So Gucci, for example, could decide to join the platform and be a shareholder – in which case their claim to the IP would be as great as Louis Vuitton’s claim to the IP. That is the main difference between this project and the IBM Maersk project, which hopefully makes it much more comparable to Komgo, the trade finance consortium.”

In addition, Quorum’s data privacy tools should ensure that no information will be leaked between brands or their customers.

Further facilitating cooperation among firms, the project is very much in line with luxury-goods industry standards, the source said, and particularly with the recent anti-counterfeiting efforts of the European Union Intellectual Property Office.

Beyond CryptoKitties

It’s not surprising LVMH chose an enterprise variety of ethereum since it’s the blockchain which gave birth to the ERC-721 non-fungible token (NFT) standard. This allows for digital representations which are not only immutable but provide a hallmark of a one-and-only, unique item.  

While the most famous example of NFTs is the whimsical game CryptoKitties, this kind of token has serious business potential.

For example, it could conceivably identify an individual handbag and trace the whole journey of its lifecycle from an alligator farm to the store where it was sold for the first time, and then the multiple chains of owners that have owned and sold it.

Another fundamental reason LVMH chose ethereum is that the group sees today’s permissioned version as merely an intermediate step to a grander vision, once the technology matures, said the source, adding,

“They [LVMH] see down the line permissioned and public networks as needing to be interoperable if they are to put the power back to customers. It’s also a way for a global network of distributors and resellers to connect to a network without restriction.”

Louis Vuitton store image via Shutterstock

Sending bitcoin lightning payments over the web might soon get easier.

That’s because a new bitcoin standard for simplifying lightning payments, the open-source WebLN standard, is gaining traction, now being used by Lightning Joule and Bluewallet, two of the more popular lightning wallets, as well as apps like Lightning Spin, to slim down the number of steps a user needs to make a payment.

This is an important step for lightning, an experimental technology that is still risky to send real money over. Developer warnings aren’t stopping eager users from trying out what they believe to be the future of bitcoin payments, and as they’ve toyed with payments, they’ve bumped into issues trying to send or receive value.

The standard, written by developer William O’Beirne, is inspired by his work contributing to popular ethereum services, MyCrypto and MyEtherWallet, both of which are used for storing ethereum’s native currency, ether. This might seem a bit odd because bitcoin and ethereum users often seem like rivals, battling on Twitter and debating the merits of each cryptocurrency. But O’Beirne doesn’t seem to care about that.

His work on ethereum’s web standard, Web3, led him to what he calls an “a-ha moment,” where he decided lightning opens up opportunities for a similar set of standards for bitcoin that could make interacting with payments on the Web much easier.

“The Web is the most obvious place for micropayments,” O’Beirne argued.

The ultimate goal, as he showed in his presentation of Chrome browser extension Lightning Joule last fall, is to embed payments into the web so that they’re really easy to use.

O’Beirne told CoinDesk:

“I want to make it really easy for new lightning projects to have a great UX for making payments without having to reinvent the wheel of how to display payments to users, or get them to provide invoices.”

He gave an example of a WebLN-enabled site that allowed users to quickly paying a Satoshi (worth about $0.00004) to get rid of advertisements for the day.

Easier payments

That said, while WebLN is inspired by ethereum, O’Beirne says “WebLN is a lot more stripped down than Web3.” After all, lightning is not a “Turing-complete system.” Rather, since bitcoin’s lightning is more focused on payments, that’s where the focus of WebLN lies.

But it’s similar in that it’s a standard that makes app building easier for developers. And in the end, helps to reduce the number of steps users need to take to make a payment.

By example, Bluewallet recently launched a marketplace within its mobile app that lists a bunch of different services which accept lightning transactions, including LN.pizza, Bitrefill, a startup that sells gift cards for bitcoin, and the like.

If a user were to go to, say, the LN pizza website on its own, they would have to grab the invoice by copying it, open their lightning wallet, then stick it in the wallet.

But if you go straight through Bluewallet marketplace, it simplifies the process. It automatically grabs the invoice and copies it into Bluewallet for a user to pay to buy their pizza. “They use WebLN to inject [the invoice] into the page,” O’Beirne said.

“[WebLN] allows us to provide a better user experience – like one-tap payments and withdraws, and facilitates and standardizes “actions” that should be standardized for the sake of the industry moving faster and in the right direction. So we fully support it and try to make other developers to do the same,” BlueWallet product and UX engineer Nuno Coehlo told CoinDesk, adding that it has enabled “thousands” of purchases.

This little marketplace is like a window into how much easier the process could be for lightning micropayments across the World Wide Web, if such a standard gained enough traction and was used everywhere – perhaps the big dream goal – rather than just on a few random apps.

Lightning apps can get this functionality to work for their app if they want. But with a standard like WebLN, the idea is developers don’t need to reinvent the wheel.

Or, O’Beirne added, in the future, he plans to add an experimental technology that allows users to send money directly to a node without generating an invoice.

WebLN has some other features as well that aren’t quite related to payments.

“There’s also an element of identity,” O’Beirne said, where users could use their lightning node’s public key – a string of random letters and numbers showing – to login to a website. It could effectively replace passwords.

“Some of this is still being built out,” he added.

‘Stealth’ projects and beyond

Still, as the project GitHub points out, WebLN is still “early-stage” and “subject to change.”

O’Beirne said that next steps are to improve the developer documentation and draw up some demo videos to make it easier for developers to implement WebLN.

O’Beirne has also been in touch with Casa (a popular lightning service that launched a Chrome extension similar to Lightning Joule, but with different functionality), as well as Bitlum, another browser-based wallet. But while both seem interested in WebLN, neither wallet has “committed” to doing so quite yet.

Other “stealth projects” are interested, too. “I get DMs from people working on stealth projects – asking how the spec works.”

Over the summer, O’Beirne will be working at Chaincode Labs, a research group led by Bitcoin Core contributors Alex Morcos and Suhas Daftuar that funds some of bitcoin’s most active protocol developers. He hopes that this will give him an opportunity to continue working on WebLN, and get more wallets to adopt the standard.

All that said, though, there’s also another standard lightning developers are eyeing right now that has to do with standardizing how lightning is used in the Web: W3C, which is the international organization drawing up rules for the Web for all browsers to follow.

Since some think developers should focus on that set of standards, O’Beirne goes as far as to call it a “spec war.” But so far, there don’t seem to be any implementations of W3C that support lightning.

That said, he sees WebLN gaining traction as he works on it this summer: “At this point, I feel like we’re going to see more adoption. At least for generating lightning invoices, which is a frustrating experience.”

Www image via Shutterstock

Holders of the dollar-pegged stablecoin TrueUSD can now leverage their funds to generate returns under a new partnership between the token’s developer TrustToken and crypto lender Cred.

The deal will enable TUSD holders take part in the CredEarn program, which pays back interest for loans of digital assets to Cred’s platform. Within the U.S., TUSD holders in 29 states can participate in the program.

David Steinrueck, marketing and communications manager with TrustToken, told CoinDesk that individuals who send their funds to Cred can earn “up to 8 percent” in annualized returns.

Under the terms of the partnership, TrueUSD holders must transfer their tokens to a CredEarn wallet for a minimum six-month commitment. They will earn interest quarterly, and can renew their accounts for three months after their initial term expires.

“The reason that we say ‘up to’ is that at the current time … legally, we can’t say guaranteed … because it is an investment,” Steinrueck explained. “If you lock your funds in here, you’ll get an 8 percent return, you’re locked into that rate and after a 6-month rate or quarterly [you get your return].”

CredEarn will, in turn, lend the assets to miners, investment funds, retail investors and other digital asset companies “on a guaranteed and collateralized basis,” though it will not lend to short-sellers. Returns from these entities will be passed on to holders.

Steinrueck likened the feature to a bank account or a certificate of deposit (CD) investment (a comparison he later rescinded), saying:

“I would say that … there’s definitely risks and you’re taking out some risks because it’s an investment, but there’s not a scenario here where they’ll say ‘oh we’re only giving you 7 percent or 5 percent,’ you’re locked in. So the risk the consumer is evaluating is ‘do the people who stand behind these assets [have] insurance … do we trust those people to generate those returns and evaluate their consumers and load process accurately?'”

As such, he added, any risks from a consumer standpoint would be evaluating the companies participating in providing the accounts.

Uphold, BitGo, Bittrex and Ledger are acting as custody providers for the funds sent to CredEarn, according to a press release. BitGo will provide insurance on customer assets up to $100 million through its separate partnership with Lloyd’s of London. The firm noted that BitGo Inc., and BitGo Trust Company would custody different assets separately, but assets will be insured either way.

The new CredEarn offering sounds similar to BlockFi, another crypto lending startup which announced a crypto deposit account at the beginning of this month. The company said users would be able to earn 6.2 percent interest on their holdings annually, though it later cut this figure for its institutional investors.

BlockFi said it has already taken in more than $35 million for the deposit accounts, with $25 million coming in the first two weeks after the accounts were announced.

UPDATE (March 26, 20:00 UTC): After publication, TrustToken’s marketing manager said he misspoke when he compared CredEarn to a bank account or CD. The relevant passage has been amended.

Image via Shutterstock

Cryptocurrency mining equipment maker Bitmain’s application for an initial public offering (IPO) on the Hong Kong Stock Exchange (HKEX) has officially lapsed, meaning no such transaction is happening anytime soon.

According to an update on the HKEX’s website, Bitmain’s case has been moved to a group of “inactive” applications and is now labeled as lapsed, six months after the company filed the prospectus on Sept 26.

If it still wishes to pursue a listing, Bitmain can re-file the application, but the company would be required to provide additional financial records beyond what was included in its initial filing.

According to a listing rule from the HKEX, “the latest financial period reported on by the reporting accountants for a new applicant must not have ended more than six months from the date of the listing documents.” However, the last public filing from Bitmain only covers the period ending June 30, 2018, nearly nine months ago.

The application drew wide attention last fall as Bitmain disclosed eye-popping profit growth over the past several years. For instance, just for the first half of 2018, the mining giant brought home a net profit of nearly $1 billion, after having made over $1 billion for all of 2017.

Despite such rapid growth in the bottom line, reflecting the surging cryptocurrency market of 2017, the HKEX was hesitant to approve applications from Bitmain and its mining rivals Canaan Creative and Ebang, due to the industry’s volatility.

Indeed, in line with the market slump of 2018, Bitmain suffered a loss of about $500 million in the third quarter of last year.

It’s unclear at the moment whether Bitmain is contemplating another attempt any time soon to go public. The company published an announcement on Tuesday stating:

“Bitmain’s listing application to HKex in September 2018 has reached its 6-month expiration date. … We will restart the listing application work at an appropriate time in the future.”

The company also confirmed in the same announcement that its co-founders Jihan Wu and Micree Zhan have stepped down as co-CEOs. Haichao Wang, previously a director of product engineering at Bitmain, was officially appointed Bitmain’s CEO, months after news report said a management shakeup was in the works.

But if it does not find another way to go public, the company may be on the hook to repay more than $700 million to its venture capital investors.

As of June 30, 2018, Bitmain had a $715 million liability on its balance sheet labeled “redeemable, convertible and preferred shares,” resulting from its Series A and Series B funding rounds closed over the past two years. This amount accounted for nearly half the company’s total liabilities at the time.

According to the company’s IPO prospectus, the terms Bitmain agreed to with these investors included a redemption clause, which gives shareholders the right to require Bitmain to redeem or repurchase all or part of their shares if either one of two events happens. 

One such situation is “neither a qualified [REDACTED] nor a qualified trade sale defined in the terms has occurred by the fifth anniversary of the preferred shares’ issue date,” the document says. The other is the occurrence of a breach by the company or its controlling shareholders that has a “material adverse effect” on the firm’s overall businesses and “has not been cured within 30 days as defined in the terms.”

A passage from Bitmain’s IPO prospectus

Shirley Wang, a partner at the law firm of Baker McKenzie FenXun with expertise in debt capital markets, said such redemption clauses are a common and typical way to protect investors and it’s not unusual for investors to initiate a redemption procedure. But the conditions under which redemption rights can be exercised vary from deal to deal, she added.

While it’s unclear what exact type of event was redacted from the passage in Bitmain’s prospectus, a clue can be found in a term sheet for Bitmain’s B+ round, in which the firm raised $440 million.

According to a copy of that document obtained by CoinDesk, investors have the right to redeem all or part of the B+ preferred shares at any time after the earlier of:

“i) 5 years from the closing date (if no qualified IPO), or ii) upon any breach by any Group company or any founder parties of the terms of the transaction documents in connection with the transactions contemplated hereby which amounts of a material adverse effect and is not cured within 30 days.” [Emphasis added]

Under such conditions, Series B+ round investors could require Bitmain to redeem the shares in an amount equal to the purchase price plus “all declared and unpaid dividends” and “an assumed 10% compounded” annual return for each year such shares are outstanding from the closing date, less any amount received by the investors.

This term sheet further specified what a qualified IPO means for Bitmain’s B+ round investors, stating:

“Qualified IPO is defined as an underwritten public offering of ordinary shares of the Company at a public offering price per share (prior to underwriting commissions and expenses) that values the Company at least US$18 billion in an offering of not less than $500 million).”

Although the amount of money Bitmain intended to raise from the IPO was also redacted from the HKEx prospectus, documents obtained by CoinDesk last summer indicated the proceeds would have been as high as $18 billion at a market capitalization of $40 to $50 billion.

Bitmain co-founder Jihan Wu image via CoinDesk archive

Bitcoin’s average daily trading range so far in March is its lowest in nearly two years when, at the time, the world’s largest cryptocurrency was worth roughly a quarter of what it is now.

At the time of writing, bitcoin’s average 24-hour trading range so far this month, defined as the average difference between the high and low price of each day in a given month, has been just $85, its lowest average range since the same metric recorded $32 in April of 2017, according to CoinDesk data.

Notably, the average trading range (also known as the average daily volatility) segmented by month has fallen much faster than bitcoin’s market prices as can be seen below.

Indeed, bitcoin is currently trading across exchanges at an average price of $3,943, comparable to levels seen in September 2017, while volatility has returned to levels observed when bitcoin’s price was roughly $1,000.

Yet, periods of low volatility tend to precede a big move in either direction in a market, as was the case in 2017.

In fact, April of 2017 was the first month to close sufficiently above the top of its previous bull run in 2013 and was followed by a multi-year bear market. After April closed with an average daily trading range of $32, the price of bitcoin went on to surge 65 percent the following month with an average daily trading range of $153 – nearly four times higher than that seen the month prior.

BTC/USD Weekly Chart

Just as bitcoin’s price was indecisive in April as it approached the key technical hurdle of a previous all-time high, bitcoin is now approaching another major technical hurdle in the form of long term downtrend resistance.

As shown above, bitcoin’s current price is just below a crucial downtrend line, which if broken could be a sign its market has shifted from bearish to bullish or at-least bearish to neutral, just as it did in 2015 when prices surpassed a near identical downtrend line.

Disclosure: The author holds several cryptocurrencies, please see Sam’s author profile here for more information. 

Measurement tools via Shutterstock; Charts by TradingView