A gold-backed cryptocurrency called “PayMon” has reportedly been launched in Iran.

According to Financial Tribune, four Iranian banks – Bank Mellat, Bank Melli Iran, Bank Pasargad and Parsian Bank – have partnered with blockchain startup Kuknos Company for the project.

Aimed for use in tokenizing the banks’ assets and properties, a billion PayMon will initially be issued, the report indicates. Iran Fara Bourse, an over-the-counter (OTC) crypto exchange, is likely to use the token, it adds.

It was reported in July 2018 that Iran might develop a national crypto as a means to bypass new economic sanctions enacted by U.S. President Donald Trump. The cryptocurrency would back and tokenize Iran’s national fiat currency, the rial, in order to facilitate domestic and cross-border transactions.

Last week, though, the Central Bank of Iran issued a draft report saying that it may seek to block the use of unapproved cryptocurrencies as a means of payment.

Last month, US lawmakers introduced bills against Iran’s efforts to create a sovereign cryptocurrency.

Portions of the Blocking Iran Illicit Finance Act, introduced by Rep. Mike Gallagher (R-Wisc.), called for an investigation into Iran’s crypto efforts. A corresponding bill was submitted in the Senate by Sen. Ted Cruz (R-Texas). The proposals call for sanctions against those who knowingly provide Iran with funding, services or “technological support, used in connection with the development of Iranian digital currency.”

Iran image via Shutterstock 

What appear to be leaked bank documents suggest that millions of dollars-worth of cryptocurrency from the now-bankrupt bitcoin exchange Mt. Gox may have been sold on the the open market through Japan’s BitPoint exchange last year.

Goxdox, a site dedicated to supporting the creditors of Mt. Gox, published images of bank transactions on Tuesday, stating that they show payments in Japanese yen from BitPoint to the account of the Mt. Gox trustee, Nobuaki Kobayashi. The payments amount to 34.3 billion yen (about $312.5 million at today’s exchange rate).

The most likely explanation is that the payments represent fiat funds resulting from the sale of bitcoin and bitcoin cash from Mt. Gox, the site concluded, saying:

“Unless BitPoint is being really generous, we’d wager the reason they are depositing billions JPY into the trustee’s bank account is because they were hired to sell the MtGox Estate’s BTC/BCH.”

If indeed he sold the cryptocurrency in this manner, Kobayashi went against the advice of Jesse Powell, the CEO of crypto exchange Kraken, which was hired in 2014 to assist the search for Mt. Gox’s missing coins. According to the post, Powell said he had advised the trustee to not sell the cryptocurrency, or to do so via auctions or over-the-counter (OTC) sales to avoid affecting market prices.

“Creditors should demand details on BitPoint’s selling methods. The trustee should explain why Kraken’s advice was ignored,” Goxdox said. “Instead of taking Kraken’s advice, the trustee decided to (1) sell, (2) not tell us how he sold, and (3) hire a different so-called ‘cryptocurrency expert’ to sell the BTC/BCH.”

The so-called “dumpening” of the crypto holdings by the trustee may have affected bitcoin prices across last year, the post continues, adding the disclaimer that it is not yet absolutely certain how the coins were sold.

Back in March, Kobayashi denied being the cause of the decline in bitcoin prices since December 2017 with the sale of some $400 million-worth of bitcoin and bitcoin cash.

“Following consultation with cryptocurrency experts, I sold BTC and BCC, not by an ordinary sale through the BTC/BCC exchange, but in a manner that would avoid affecting the market price, while ensuring the security of the transaction to the [greatest] extent possible,” the trustee said at the time, using the alternate ticker symbol BCC for bitcoin cash, which is more normally assigned the symbol BCH.

However, he refrained from disclosing precise details of how the funds were sold.

Mt. Gox image via Shutterstock 

The troubled crypto exchange QuadrigaCX has appealed for creditor protection, setting the stage for a significant court hearing on Feb. 5 in Canada.

Last Thursday, the exchange’s appeal was made before the Nova Scotia Supreme Court, with QuadrigaCX claiming that doesn’t have access to wallets containing some $137 million (U.S. dollars) in cryptocurrency. As such, it has claimed to be unable to repay more than 115,000 customers who are owed funds – and creditor protection is being sought to forestall any lawsuits while it attempts to find a solution.

To that end, QuadrigaCX is seeking to have professional services firm EY oversee its proceedings. Tuesday’s hearing, at 830 a.m. EST, will see the companies go before the court.

Christine Duhaime, a financial crimes attorney and managing partner with Duhaime Law, told CoinDesk that the most likely outcome during the hearing will be that a monitor – in this case, likely Ernst and Young – will be appointed.

Quadriga’s filing was not just for a monitor, however. Applying for creditor protection means it is trying to prevent customers from suing to recover lost funds, she noted.

Duhaime explained:

“There are many unanswered questions though, for example, why have the wallet addresses not been disclosed? As you know in Bitcoin world, people know the pooled wallet addresses of exchanges – its not confidential or business information so that’s an unanswered question that a Court eventually will have to address. Someone is eventually going to bring an application for disclosure of all the wallet addresses.”

“Transparency is going to be critical for Quadriga and providing the wallets addresses is the first step to transparency,” she added.

EY proposal

The professional services firm EY has already submitted an initial report after discussing the situation with QuadrigaCX, according to a filing obtained by CoinDesk.

“The Proposed Monitor understands that Quadriga is experiencing a liquidity crisis and has been unable to satisfy withdrawal requests from users. Additionally, Quadriga has been unable to locate a significant amount of cryptocurrency following the death of the Applicants’ founder and Chief Executive Officer, Gerald Cotten,” the filing states.

The filing notes that the company has not yet been able to verify the details included in Quadriga’s initial filing, though it “has assumed the integrity and truthfulness of the information and explanations provided to it.”

In its report, EY explains that a number of factors resulted in Quadriga’s current issues, including its lack of a corporate bank account and Cotten’s death.

Most notably, EY has recommended that Quadriga maintain the suspension of its website. The exchange first took down its trading platform last week, after voting in new directors to run the company.

The firm has also recommended that Quadriga receive creditor protection under the Canadian Companies’ Creditors Arrangement Act.

Doing so, it explains, will allow for a full investigation of the exchange and its business, which will determine what assets are available for distribution and what is actually owed to users (in its report, EY claims that Quadriga only owes funds to 92,000 users – far fewer than the exchange’s claim of 115,000 users).

Plan pitched

If granted, Quadriga has a rough plan to operate through the next 13 weeks, or until April 28, the EY report says.

Duhaime noted that unless customers or shareholders have an opportunity to file affidavits or other submissions prior to the hearing opposing this protection, it is likely that Quadriga will receive the court’s approval.

Customers can appeal this decision, “and they can take action to protect their interests and seek the return of their funds” – but that would be dependent on the order issued Tuesday, she explained.

Duhaime did question why Quadriga filed for creditor protection in Nova Scotia, rather than British Columbia, where the companies affiliated with the exchange are registered.

“One of Quadriga’s new directors is resident in British Columbia. Quadriga’s only known former accountant and auditing firm is in British Columbia. One of the [companies] is cease traded in British Columbia which means that the British Columbia Securities Commission has jurisdiction over that company. Its corporate records are in British Columbia. Most of its shareholders are in British Columbia and a sophisticated transfer agent in British Columbia, is in charge of shareholder matters for that company,” she noted, adding:

“In my opinion, I cannot see a Nova Scotia judge, if he or she is apprised of all of the actual matrix regarding the connections to BC, concluding that a Nova Scotia Court has jurisdiction. It may happen that a Nova Scotia Court accepts jurisdiction but usually a Judge would ask the party to prove the jurisdiction issue, especially in this case where the applicant is seeking an order to prevent litigation so the rights of parties across the country are affected.”

Funds recovery

The most important issue in the case revolves around the wallet addresses, Duhaime said. As far as Quadriga is concerned, the most important priority should be “making [customers] whole.”

EY’s report says there are two initial sources of funds that can be recovered quickly: the cash held by Quadriga’s payment processor in the form of bank drafts, and any cryptos or fiat held by third-parties.

The company may also look into selling the QCX trading platform, as it is potentially “a saleable asset of considerable value.”

As these sources of funds are liquidated, the company added, it will hire “cryptocurrency forensic advisors” to try and locate or access the missing coins.

Duhaime noted that in other cases, an exchange might track wallet addresses and have other exchanges it is working with freeze any activity to preserve funds. But that has not happened with Quadriga.

Quadriga has also not yet asked for a court order to freeze its assets as a form of protection for customers.

“People may query why a freezing order makes sense but if you are an exchange and your wallets with all your funds are suddenly not accessible, wouldn’t you rush to get a court order to stop anyone else from possibly spending those funds or transferring them to other parties?” she told CoinDesk.

Gavel image via Shutterstock

View

The current calm in the bitcoin (BTC) market is reminiscent of the lackluster trading witnessed in October.

Bitcoin’s daily trading range, the spread between the highest and lowest prices, fell to $33 yesterday – the lowest since Oct. 31, according to CoinMarketCap data. On that date, the leading cryptocurrency had witnessed a daily trading range of $32.

Back then, BTC was squeezed above $6,300 for four weeks leading up to Nov. 14, when the cryptocurrency dashed hopes of a long-term bullish reversal with a convincing break below the crucial support of $6,000.

The latest bout of sideways trading below $3,500 is just seven days old and was preceded by a gradual sell-off from late December highs above $4,200.

The odds of the consolidation ending with an upside move are high, as the cryptocurrency has charted a falling wedge – a bullish reversal pattern – on the daily chart.

As of writing, BTC is trading largely unchanged on the day above $3,420 on Bitstamp.

Daily chart

On the daily chart, BTC is probing the upper edge of the falling wedge, currently at $3,430.

A daily close (UTC) above that level would confirm a wedge breakout and allow a rally to $3,658 – the high of the bearish gravestone doji created on Jan. 26. A violation there would validate the wedge breakout and open up upside toward the psychological hurdle of $4,000.

4-hour chart

As seen above, BTC cleared the lower edge of the channel yesterday in favor of the bears.

Even so, the psychological support of $3,400 continues to hold ground, signaling seller exhaustion. Hence, BTC could well make a falling wedge breakout in the next 24 hours.

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

Bitcoin image via CoinDesk archives; charts by Trading View

The bitcoin community is currently immersed in an experiment called the “lightning torch.”

The effort is intended to show the value of bitcoin’s lightning network – an up-and-coming technology that is experimental and hard to use so far, but it does offer improvements over today’s most common payment systems by allowing users to pass money around the world quickly and without a third party, unlike Mastercard and Paypal.

And participants are out to show this facet of the technology in a kind of global relay race using an ever-increasing amount of BTC.

By way of the social media platform Twitter, people pass the “torch payment” from one person to another, adding 10,000 satoshis (worth about $0.34 at press time) to the payment before sending it further along. Imagine a kind of lightning network-style snowball effect and you get the basic gist of what’s happening around the world.

It’s been called the “LN Trust Chain” since whoever has the torch is supposed to send it on to someone they trust will send the payment on, rather than keep the payment to themselves.

Indeed, developers might still call lightning “reckless,” since it’s experimental software and users can lose money if they (or the software) makes a wrong move. There’s even a Twitter hashtag dedicated to this fact.

But so far, the experiment seems to be having its intended effect, The “torch” has attracted the participation of 139 people in at least 37 countries, according to the pseudonymous torch ringleader, who goes by the name Hodlonaut.

Screenshot from https://www.takethetorch.online/Torch

The list of participants includes some notable names in the bitcoin community, such as advocate and Mastering Bitcoin author Andreas Antonopoulos.

“Heretical thought of the day: Playing #LNtrustchain is better than watching the Superbowl,” he tweeted after sending the torch to the next participant, adding:

“Ok, I lied. Anything is better than watching the Superbowl for this geek.”

Thus far, other participants include Morgan Creek Digital founder Anthony Pompliano and Lightning Labs engineer Joost Jager.

Humble beginnings

The torch started on a whim.

On January 19th, Hodlonaut said he would pass on 100,000 satoshis to the first person he trusts. “How many satoshis until it breaks?” he tweeted.

“The reason I started this was just to have some fun with the lightning network and maybe spread more awareness. I thought it would maybe do five or six hops and then die, without many people noticing,” Hodlonaut told CoinDesk.

But now, of course, it’s grown into a worldwide phenomenon as illustrated in the map above, equipped with its own website and an accompanying hashtag.

Not to mention, it’s come to mean a lot to its participants.

“The #LNTrustChain showed the world: 1. Lightning works and it’s amazing. All of us who’ve used it in a solo context (buying stickers, playing games, etc) already knew it, but this experiment was the first widespread public demonstration of its power,” said one user.

Antonopoulos told CoinDesk that the torch represents a way to test and uncover problems with the technology. And it’s not quite as easy to participate as it sounds: setting up a lightning node is a hard enough task, but there are other tricky factors as well.

“To be able to ‘play’, your [lightning network] node must be well connected, with enough capacity and well balanced (local vs remote balance),” he explained. “Since a lot of that is not fully automated yet, it poses a challenge for node operators and an opportunity to test their setup. As the amount gets bigger, it is harder and harder to find routes and keep it going.”

In this way, the lightning torch can help to unearth bugs, Antonopoulos added.

It’s even been used to experiment with new tech. The first so-called “hodlinvoice” – a new type of tech by LND – was used in the wild for the first time.

As Hodlonaut explained:

“The way this has played out has completely blown my mind, and made me realize how awesome the bitcoin community is.”

To that end, he’s been making sure people know who has the torch and cat-herding the community on Twitter.

Escape from extinguishing

As might be expected from any kind of globe-trotting experiment, the torch itself almost died a few times, most notable on Jan. 31 when a Twitter user by the name of edward_btc stole it.

“I’ll seize it because I can, and no one can stop me. This is bitcoin,” edward_btc wrote, his point being that bitcoin is supposed to be “trustless” money.

The community responded with irritation, not wanting the torch to die out.

“Are you really going to be *that* guy? Seriously?” responded Elizabeth Stark, the CEO of Lightning Labs and one of CoinDesk’s Most Influential awardees for 2018.

On a darker level, though, edward_btc went as far as to claim that he received death threats for keeping the torch.

And later on, he claimed that he was actually planning to send the torch on. But before he was given a chance, user Klaus Lovegreen swooped in and started a new torch.

“Is there anyone with some dignity around that that can be trusted with the Lightning Torch?” he said. Since then, the torch has jumped another 30 hops.

But when will it end? As it stands, there’s a hard-coded limit to how large the torch can get: 4,390,000 satoshis, which worth about $150.

Once the torch reaches this threshold, the community plans to donate the proceeds to a charitable cause: likely Bitcoin Venezuela, a non-profit dedicated to raising awareness of cryptocurrency in the troubled South American country.

Torch image via Shutterstock 

Social media giant Facebook is growing its blockchain efforts by hiring staffers from Chainspace, the startup behind a smart contracts platform.

The news of the hires – first reported by Cheddar – demonstrates that the social media company is moving ahead with its blockchain ambitions, which were first revealed last May with the announcement of a new, dedicated blockchain unit.

The researchers behind Chainspace may be well suited to help Facebook scale blockchain across a range of applications. According to its website, Chainspace uses sharding – the process of breaking a database into smaller units – to alleviate the scaling problems faced by blockchain networks.

Four out of the five researchers behind the academic paper on which Chainspace is based will be joining Facebook, according to Cheddar. A Facebook spokesperson confirmed to CoinDesk that the startup itself or its technology weren’t acquired, but that some of its staffers had joined Facebook’s internal blockchain group.

“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology,” Facebook said in a statement. “This new small team is exploring many different applications. We don’t have anything further to share.”

The social media giant is currently hiring for 11 blockchain roles, according to Facebook’s careers site. That’s up from five last December. According to job-description boilerplate, Facebook’s blockchain team operates as “a startup within Facebook,” adding:

“Our ultimate goal is to help billions of people with access to things they don’t have now – that could be things like healthcare, equitable financial services, or new ways to save or share information.”

The Chainspace website currently lists 11 staffers and four advisors on its team page. Currently sitting atop the site’s homepage is a message teasing Monday’s news: “We’re excited to announce that the team is moving on to something new.”

Image Credit: Katherine Welles / Shutterstock.com