Duke University is teaming up with blockchain startup Citizens Reserve on an educational initiative aimed to develop students’ interest in blockchain technology.

Citizens Reserve, a firm led by a team of former Deloitte blockchain employees, told CoinDesk Friday that it will jointly create a new incubation lab on Duke campus for students to work on real blockchain projects and host blockchain-focused events.

The company will also support the university in putting together a curriculum on blockchain technology, as well as in connecting students with blockchain experts and helping them find jobs in the sector when they graduate.

“As a Duke MBA alumnus, I am excited to spearhead this program, and help the next generation of blockchain advocates and leaders succeed,” said Yonathan Lapchik, chief innovation officer at Citizens Reserve.

He added:

“Many industries, including finance, supply chain, and healthcare, are already exploring the potential of blockchain technology, so it is more important than ever to provide students with the tools needed to develop the skills, connections, and knowledge employers will seek from tomorrow’s workforce.”

Citizens Reserve launched a supply chain platform called SUKU in September, leveraging both the ethereum and quorum blockchains. Participating students in the program will be able to work on active incubation lab blockchain projects through the platform, according to the announcement.

“The lab will come equipped with tools, such as mining rigs, that will enable students to explore various blockchain mechanisms,” the firm added.

Campbell Harvey, a finance professor at Duke University’s Fuqua School of Business, will serve as the faculty advisor to the program.

Harvey said that “it is crucial that academic institutions be willing to collaborate with thought leaders in the blockchain industry, and we look forward to working with Citizens Reserve in this regard. Duke is very proactive in external collaborations and we are excited about the opportunity for our students to get hands on, industry-relevant experience.”

Duke University already offers an “Innovation and Cryptoventures” course, launched by Harvey back in 2014. He also recently helped found the Duke Blockchain Lab, a student-led organization, providing a connection to the professional blockchain community.

Duke University image via Shutterstock

BlockFi has changed the terms of its interest-bearing cryptocurrency deposit account just weeks after launching it.

Beginning April 1, for accounts with more than 25 bitcoin or 500 ether, BlockFi will pay only 2 percent on the amount deposited above the threshold, not the originally advertised 6 percent, according to an email sent to customers March 20 and a company blog post that same day.

“Due to the demand for our product, we’re making a few changes to our product pricing that will affect your account starting in April,” the company said in the email.

The interest rate on balances below the thresholds will remain 6 percent, compounding monthly for an annual percentage yield (APY) of 6.2 percent, according to the email, as well as a tweet sent by BlockFi’s director of marketing, Brad Michelson.

“Everything below 25 BTC still gets the 6.2% APY,” he wrote.

BlockFi CEO and founder Zac Prince told CoinDesk that the change was caused by the unexpectedly large demand from institutional clients that wanted to deposit more than $1 million worth of crypto.

Prince said:

“We saw a rapid uptick in institutional participation, at sizes that BlockFi and the current crypto borrow market is not able to support at a 6% rate. Generally, large depositors would have a call or meeting with us before depositing and we would tell them not to contribute more than $1 million for the time being. We started to see institutional accounts created followed by deposits well over $1 million, which is not who we think of as our core client and not the type of activity we want at this time. We may create structures to accommodate this type of activity via different vehicles in the future.”

The BlockFi blog post notes that the account was meant to be “a consumer-focused product,” and says the adjustment was necessary to ensure the company “can support as many clients as possible.”

The minimum deposit amount to earn interest may drop in the coming months, further to BlockFi’s goal of serving “the average crypto consumer,” the post added.

According to Prince, fewer than 50 customers, or 1 percent of the total clientele, were affected by the change.

While some large customers may be disappointed by BlockFi’s change, they shouldn’t be surprised.

The company’s terms and conditions give it a great deal of flexibility over the rates it can pay, explicitly saying that BlockFi will change the rate at its discretion.

BlockFi officially launched the deposit product on March 5, but before that had been beta testing it since January.

The interest is denominated in crypto, is supposed to be paid monthly and the way BlockFi intends to earn it is lending crypto to financial institutions, Prince told CoinDesk in an interview this week.

The product attracted a lot of attention and got BlockFi $35 million in deposits during the first two months of existence, according to Prince.

The company’s terms and conditions page will be updated to reflect the new interest rates, he said on Twitter.

UPDATE (March 22, 17:45 UTC): This article has been updated to include additional quotes from BlockFi explaining the interest rate reduction.

BlockFi CEO Zac Prince image by Anna Baydakova for CoinDesk

Chicago-based cryptocurrency exchange Seed CX, which Bain Capital backed last year, is expanding to Asia.

The institution-focused exchange announced Thursday that it has teamed up with Singapore-based trading infrastructure technology provider Hydra X for the effort. The partnership will allow Seed CX to integrate its platform with Hydra X’s trading platform Sigma, which is currently in beta.

Once the integration is complete, Seed CX users will be able to view prices, trade and monitor their portfolios on the Sigma platform, as well as have access to a fiat-cryptocurrency gateway, according to Seed CX.

“This partnership will also be useful in expanding our user base to include institutional traders seeking regulated and secure access to the world of digital assets,” said Hydra X CEO Daryl Low.

Seed CX also said that it plans to offer a market for the Commodity Futures Trading Commission (CFTC)-regulated crypto derivatives through its subsidiary Seed SEF.

Last September, Seed CX raised $15 million in a Series B funding round led by Bain Capital Ventures. The investment brought the company’s total funding to date to $25 million at the time.

The firm launched a regulated bitcoin spot trading market in January, saying it offered “a deep book of liquidity.” “We’re offering truly institutional level support,” Seed CX co-founder and CEO Edward Woodford said at the time.

Another subsidiary of the exchange, Zero Hash, a FinCEN-regulated entity in the U.S., launched a wallet solution for institutions last January, aimed at adding security and transparency for its customers.

Seed CX notably has a policy in place that bars employees from trading in cryptocurrency to avoid conflict of interest.

Singapore image via Shutterstock 

The bitcoin futures market is far larger, relative to the spot market, than previously thought, says Bitwise Asset Management.

In a wide-ranging report which claims 95 percent of all reported bitcoin trading volume is faked, Bitwise says that nevertheless, the bitcoin “futures market is significant” when viewed in light of the remaining, genuine 5 percent of spot trading that occurs at regulated exchanges.

The report was presented earlier this week to the U.S. Securities and Exchange Commission (SEC), which is currently reviewing a bitcoin exchange-traded fund (ETF) proposal Bitwise filed in January this year with NYSE Arca.

CoinMarketCap, one of the most prominent sources of crypto trading information, says the bitcoin market’s average daily volume is roughly $6 billion, but Bitwise argues that, going by its own methodology (which it outlines in some detail in the 227-page presentation to the SEC), the actual average daily bitcoin trading volume is only $273 million.

This discrepancy means that the futures trading volume reported by the major Chicago exchanges, CME Group and Cboe, has a far greater impact on the market than previously thought, according to Bitwise. (Although the Bitwise report doesn’t mention it, Cboe will be suspending its product in the coming weeks.)

The average daily futures volume on CME and Cboe combined totals near $85 million, which is not too far off from the average daily spot volume of $110 million on Binance, the exchange which performs the largest number of legitimate trades, according to Bitwise.

Bitwise said:

“The launch of futures, the development of lending and the arrival of major market makers combined to dramatically improve the efficiency of the bitcoin market in 2018, creating a dynamic, institutional-quality, two-sided market for the first time.”

Faked volume

Futures aside, the true spot market for bitcoin essentially exists on 10 different exchanges conducting nearly $300 million in daily trading volume, Bitwise says.

Unlike other exchanges, the 10 on its list, which include Coinbase, Bitfinex, Gemini and Binance (among others) trade uniformly with one another, meaning the average spread in price between different platforms is less than 1 percent.

“Arbitrage between these ten exchanges is virtually perfect, as demonstrated, with no sustained deviations between prices,” Bitwise says in its presentation.

The spread is far greater on other exchanges, which Bitwise believes are faking their volumes.

Notably, Bitwise says that the U.S. is responsible for a larger portion of the genuine bitcoin spot market than previously thought,

Matt Hougan, Bitwise’s head of research, told CoinDesk that his company “built infrastructure to programmatically read data from the top 81 reported exchanges.”

The company stored order book data from these exchanges, looking at recent trades “four times a second over multiple days,” with this data then being used to “run a series of statistical tests to identify fake behavior.”

The results were presented to the SEC, he said, adding:

“The pattern you see fits natural human behavior: People are more likely to trade small amounts of bitcoin than large amounts of bitcoin, and more likely to trade whole bitcoin than fractions of bitcoin (i.e., they are more likely to trade 2.0 bitcoin than 1.9 bitcoin or 2.1 bitcoin).”

ETF impact

The fact that Bitwise just told the SEC that 95 percent of all bitcoin trading volume is faked is not an issue for Bitwise’s bitcoin ETF proposal, Hougan said.

“The reality is that the fact that there is fake volume in the crypto market is not news. We are just the first firm we know of to take a truly comprehensive approach to proving and quantifying it,” he explained.

When ignoring the fake volume, the bitcoin market appears to be efficient, arbitraged and regulated, in Bitwise’s analysis.

“In addition, the regulated CME futures market represents is much more significant than most people think (because they have the denominator wrong),” Hougan added.

The SEC has already explained that an ETF proposal must show that either the underlying market for a fund is “uniquely resistant to manipulation,” or that there is a regulated market of significant size. Bitwise’s report tried to demonstrate both, Hougan said.

The SEC will make an initial decision on whether to approve, reject or extend the review period for Bitwise’s ETF proposal sometime within the next week, with a legally-mandated deadline at the end of March.

Image via Shutterstock

Mt. Gox Legal, a group of around 1,000 creditors of collapsed crypto exchange Mt. Gox, has prepared a draft proposal representing its consensus on how the exchange’s remaining assets should be paid out, according to a document obtained by CoinDesk.

Mt. Gox trustee, Nobuaki Kobayashi, released new details this week on the amounts of secured cryptocurrency (in bitcoin and bitcoin cash) and fiat currency it has approved for payouts to the estate’s many creditors as part of the civil rehabilitation process.

In total, Kobayashi said, the balance of the exchange is 69,553,086,521 Japanese yen ($629,594,540) in cash. It also holds 141,686.35 BTC and 142,846.35 BCH – cryptocurrency worth over $593 million.

The trustee continues to hope that more of the funds said to have been hacked from the platform will also be retrieved. The estate is also attempting to retrieve money believed to be owed to Mt. Gox by other parties, including former CEO Mark Karpeles and Mt. Gox majority owner Tibanne Co.

The trustee’s document indicates that it has approved claims for 802,521 BTC (worth $3,233,256,500), 792,296 BCH ($124,953,000), $38,165,664 in U.S. dollars, and other amounts in various fiat currencies.

There’s an obvious issue, however. There is not enough secured cryptocurrency still in the Gox coffers to cover approved claims for BTC and BCH; neither is there enough fiat currency to cover the cryptocurrency pro rata in cash at current valuations.

And it’s not yet clear how Kobayashi will allocate the funds when the payouts to creditors eventually start. So far, he has set a date of April 26, 2019, as the submission deadline for a rehabilitation plan proposal, however.

Fork trove

Mt. Gox Legal’s plan– which the group stresses is not a formal rehabilitation plan as set out in Japanese law – also looks at the issue of distributing coins that have been split off (or forked) from bitcoin since the collapse, with bitcoin gold being one example.

Other currencies listed include BitcoinX (BCX), Bitcoin Diamond (BCD), Lightning Bitcoin (LBTC), Bitcoin Private, Super Bitcoin (SBTC), Clams, Bitcoin Interest, Bitcore (BTX) and Bitcoin Atom.

The group believes that the amount of additional cryptocurrency would be too much for any exchange to handle and it would be extremely complex to manage the private keys for such coins.

The draft adds:

“We note that the volume of each of these coins held by the Trustee, in almost all cases, is significantly higher than the global daily traded volumes of these currencies, therefore we are concerned that any attempt by the Trustee to sell them en masse on the open market would result in a downward movement of the value and also not be in the creditors interests.

As a result, it proposes that the keys be auctioned off after the BTC and BCH has been distributed or moved to a secure location.

This matter was addressed in the report by Kobayashi, who wrote, “The Rehabilitation Trustee understands that the cryptocurrencies split from BTC of the Rehabilitation Debtor belong to the estate of the Rehabilitation Debtor and will be a source of distribution to rehabilitation creditors.”

Obviously tired of waiting for their funds since the exchange collapsed in February 2014, Mt. Gox Legal also called for rehabilitation to be carried out in a timely fashion.

“We are only able to support a Civil Rehabilitation plan that allows for interim payments at the first possible opportunity,” the proposal states.

Among the final recommendations in the draft which was recently updated from a version drawn up last year, the group addresses the possibility of funds lost from the exchange being recovered, saying:

“We believe it is important for the Civil Rehabilitation plan to [include] an ongoing legal entity which can be the legal recipient of any funds discovered after CR is concluded and distribute them fairly among all creditors.”

Wishlist

In the draft proposal drawn up by Mt. Gox Legal goes on to list other items set out how the member creditors would wish to see Kobayashi move forward.

Firstly, funds held by the Gox estate in fiat currency should be paid out at the same rate as would have been the case under bankruptcy. “This includes, where legally appropriate, the inclusion of interest payments,” the draft states.

Mt. Gox Legal also said it anticipates that after distribution of the cash claims there will be a mix of cash and cryptocurrencies remaining. That should be distributed “pro-rata to bitcoin claims,” it said, while it suggested that creditors be offered the choice of receiving cryptocurrency either in accounts with exchanges or to private wallets.

The trustee should also not undertake further sales or purchases of bitcoin or bitcoin cash as part of the civil rehabilitation plan, as has happened in the past. Additionally, shareholders Karpeles, Jeb McCaleb and Tibanne should not receive any payout in fiat or cryptocurrency or any benefit in kind.

While apologizing for his part in the collapse of the exchange, Karpeles has previously said he did not want any of the Gox funds, adding that the “possibility is an aberration.”

Mt. Gox Legal intends to present the plan to the trustee on March 22.

Mt. Gox image via Shutterstock