Blockchain Bites: Billionaire Bullish on Bitcoin, updates on Fowler’s Crypto Capital case, and more

Another billionaire investor revealed his bitcoin exchanges. Silvergate Exchange Network has added another member of the exchange. Riot Blockchain, a publicly traded bitcoin mining company, has posted extraordinary revenue with expansion plans.

Bitcoin of the billionaire
US billionaire investor Stanley Druckenmiller, who was rumored to be short on the dollar a few weeks ago, is long on bitcoin. In a CNBC appearance on Monday, Druckenmiller revealed a significantly smaller bitcoin position than its gold horde. However, he predicts that bitcoin will overtake gold in the long run, largely due to Silicon Valley’s millennial attraction for the crypto scene. “Frankly, if the gold bet works, the bitcoin bet will probably work better because it is thinner, more illiquid and has a lot more beta,” he said. Drunkenmiller made headlines last week for his bearish views on the US dollar, which he suspects will decline over the next three to four years.

BSV failed
A protocol change in at least one Bitcoin SV (BSV) multisig wallet crippled security and led to the loss of customer funds. Bitcoin Core developer Gregory Maxwell found that after BSV developers removed a proven transaction script and replaced it with an outdated version, a wallet maker’s in-house hash function has serious security flaws. The so-called “multi-sig accumulator” function of the ElectrumSV wallet cancels transfers if more than the minimum number of keys signs a transaction and, perhaps more dangerously, allows anyone to access multi-sig funds “with too few signatures (such as none all).” One BSV user, Aaron Zhou, lost 600 BSV due to an attack exploiting this weakness.

Legal maneuvers
Lawyers are trying to ditch Reginald Fowler – accused of running a “shadow bank” service for cryptocurrency exchanges – as a client, according to court documents. Fowler and partner Ravid Yosef, who remains at large, are accused of opening bank accounts with various financial institutions to illegally store funds. Partner bank, Crypto Capital, is further locked into a black hole of $ 850 million worth of crypto funds that disappeared from the Bitfinex exchange in 2019. In October, Fowler considered reopening plea deals. Fowler’s attorneys have given no explicit reason for wanting to withdraw from the case.

SEN zen
Binance.US is the latest US exchange to join the Silvergate Exchange Network (SEN). The 24/7 instant settlement network allows cryptocurrency exchanges to transfer money between each other, replacing slower money transfers, at any time of day. Gemini, Kraken and ErisX are all participants in the service, which saw volume of $ 17.4 billion in the first quarter. “We launched SEN for our corporate clients, so they can now transfer dollars through Silvergate 24/7 instantly,” said Catherine Coley, CEO of Binance.US. “It’s a huge benefit for clients looking to raise funds on Binance.US to be able to buy and sell cryptocurrencies, and we’re excited to see the impact on the rest of our liquidity.”

The return of Riot
Riot Blockchain reported over $ 2.4 million in mining revenue in the third quarter, a 42% year-over-year increase, according to the company’s latest corporate document, although it operates with a quarterly net loss of $ 1. 7 million. After mining 222 BTC (a 41% increase over the same period last year), Riot’s corporate cryptocurrency liquidity went from $ 7.2 million in the second quarter to $ 9 million in the third quarter. And with $ 30.1 million in cash reserves, Riot is looking to expand its fleet of Bitmain S19-Pro mining machines. Riot stock was trading at $ 3.50 at close on Monday, up 32% since the start of the fourth quarter. They have increased by more than 200% since the beginning of the year.

Trend lines
CoinDesk’s Omkar Godbole examines three major trends contributing to bitcoin’s two-month rally. Having peaked at 33 months near $ 16,000, experts cite greater institutional holding (high net worth individuals like investor Stanley Druckenmiller and publicly traded companies Square and MicroStrategy), a supply crisis (huge spot market purchases by investors and retail funds such as Grayscale’s GBTC trust significantly reduced bitcoin supply, increasing the price); and technical analysis to explain the rise of bitcoin. (Grayscale, like CoinDesk, is a unit of DCG.)

Regulatory matters
“Regulators are slow and there is a reason we are slow,” Securities and Exchange Commission (SEC) member Hester Peirce said at CoinDesk’s Bitcoin for Advisors virtual event yesterday.

“We must have [a] process in place to make sure that when we are changing the rules people have noticed that we are thinking about changing a rule and can comment, “he said.

Faced with the rapidly changing cryptocurrency landscape, however, Peirce said the agency could do more to be proactive. Noting it’s less burdensome than it looks, Pierce said the SEC’s five commissioners usually send back to agency staff to approve or disapprove of new products like exchange-traded funds (ETFs).

In one such example of this deal, the SEC’s Investment Management Division yesterday issued a letter asking for comments on an expanded definition of “qualified custodian.”

In response to the Wyoming Division of Banking’s recent decision to affirm Two Ocean Trust asset management firm as a qualified custodian eligible to hold digital assets for its clients, the SEC is now asking questions. Traditionally, qualified custodians were limited to banks, registered broker-dealers and some derivatives traders, all of which are subject to strict regulation.

Now, with at least one state granting a public trust company qualified keeper status under state law, the federal watchdog is trying to add clarity to the definition.

Industry publication Decrypt writes, “The SEC letter asks for public comment on a number of questions, for example, who was excluded from the definition of qualified custodian that should be contained? Who is inside, who should be outside? And more importantly, do state trust companies like Two Ocean have the same characteristics as banks? “

Depending on where the SEC lands, this could open the door for other publicly trusted companies – such as pensions, endowments and foundations, Caitlin Long, head of Avanti – to enter the crypto fold.

As Peirce said yesterday: “There are circumstances where we have a structure at the SEC that was built in the 1930s and 40s and added over time,” he said. “Of course now that we’re seeing what’s going on in the crypto space, for example, there are areas where we will need to make changes and I think we should move faster … I’m looking forward there.”