Apex Crypto News – Crypto Management App Denies Being Hacked
Plutus, a crypto finance app founded in 2015, denied social media reports that its database was compromised by a hacking attack launched by alleged threat actors.
On July 9, Israel-based threat intelligence firm, Sixgill, published an alert through their official Twitter account which stated that hackers have been sharing a database stolen from the crypto app since July 7, with no additional details revealed.
However, a representative from Plutus sent Cointelegraph the following statement:
“We have investigated several possible attack vectors and not found any evidence of hacking. We want to reassure our customers that there is no risk of losing either their fiat or crypto balances. Our services are non-custodial by design which removes the possibility of company hacks having any impact on customer assets. So far, we have not found any evidence to suggest a successful hacking attempt.”
According to the screenshot published by Sixgill, the alleged attackers reportedly uploaded the information of 1205 to an unidentified website, together with “bcrypt” passwords. These are related to the password used by the Plutus’ users to access their wallets through the site.
Recently, Plutus announced that it started offering rewards through its debit card when users shop Nike’s online store. Doing so unlocks up to 3% in crypto and 9% cash rewards for those purchases.
Cointelegraph reached out to Sixgill for additional details but received no response as of press time. This article will be updated, should a response come in.
- Ukrainian Hacker Caught Selling Government Databases for Crypto
- Apex Crypto News – Chinese Police Dismantle $14M Crypto Scam
- The CFTC Legitimizes Crypto, Aiming To Attract Institutional Investors
- Comparing Apple to Bitcoin? Crypto Occupies a Class of Its Own
- The Encrypted Messaging Dilemma: Balancing Censorship and Freedom
Ukrainian Hacker Caught Selling Government Databases for Crypto
A Ukrainian hacker got caught selling confidential information gathered from Ukrainian central government databases.
According to a media release from the Ukrainian Cyberpolice, a hacker whose identity was not disclosed was able to break into many government databases by compromising personal accounts of authorized staff.
The hacker reportedly used brute force approaches to break into email addresses and social media accounts. Through this simple method, he appears to have found 50 government databases with up-to-date information.
He then sought to sell the captured information on hacker forums in exchange for cryptocurrency. Authorities did not disclose which currency was used.
The police searched the perpetrator’s apartment and confiscated the equipment that was used to conduct these deals. A picture from what appears to be his computer shows a Skype conversation supposedly in connection with these deals. The hacker told a potential customer that the price was “6.5 [rubles] for one valid [entry].” Presumably the customer was located in Russia, as Ukraine’s currency is the hryvnia. The price quote amounts to about $0.10 per database entry.
The perpetrator was charged with “unauthorized sale and distribution of information with limited access,” a crime with a maximum prison sentence of five years. Given the lack of high treason charges, it seems likely that the data was not extraordinarily sensitive.
Hackers will often use cryptocurrency to sell sensitive data. As Cointelegraph reported earlier in July, a hacker group netted over $7 million by selling stolen credit card data.
One common hacking method involving cryptocurrencies is ransomware, where malware encrypts the computer’s data and requests payment in crypto to unlock it. Despite many reported attacks, a recent finding shows that the frequency of these exploits declined in 2020.
A high profile data leak interested the crypto world in May, when a SIM swapping attack resulted in the compromise of BlockFi’s customer database.
Apex Crypto News – Chinese Police Dismantle $14M Crypto Scam
The Chinese authorities dismantled a significant crypto-related scam in Wenzhou. The scheme amassed over 100 million yuan ($14.31 million), which was seized along with a number of luxury cars and villas.
According to Toutiao, the gang has been operating since 2019 and primarily sought out victims through Telegram chat groups, including one called “Huobi Global Moving Brick Arbitrage HT Chinese Group Community.”
The report states the scammers pretended to be investors who had benefited from an “investment scheme.”
The scammers told their victims that all they had to do was send their cryptos to a fake Huobi wallet address, and the “investor” would receive a more substantial amount in Huobi Token (HT) in return. Instead, they received a fake HT link.
Mo Li, the head of marketing at HashKey Hub, said through a tweet that Chinese police had seized “tens of thousands” of Ether (ETH), Bitcoin (BTC), and Tether (USDT).
The scammers told their victims that the scheme would guarantee 8% in returns.
Local media outlets commented that the group was known to frequent bars and nightclubs, where they would spend their stolen money. The allegedly rented presidential suites in hotels when they traveled across China, and even rented out large office buildings to establish a headquarters for their illegal endeavors.
According to the local police, over 1,300 people reported being scammed by the scheme, as the investigation is still ongoing.
Chinese authorities also dismantled a group of alleged scammers on May 21, posing as Huobi exchange officials, who were operating an over-the-counter (OTC) website.
The police arrested 12 suspects in Guangdong province believed to be behind the scheme, after an investigation found that WeChat crypto trading groups had been infiltrated from November 2019.
The CFTC Legitimizes Crypto, Aiming To Attract Institutional Investors
The CFTC legitimizes crypto further hoping to attract more institutional investors thanks to regulatory clarity. In our latest cryptocurrency news, we find out more about their decision to regulate cryptocurrencies.
The CFTC legitimizes crypto and makes the regulation of digital assets a priority for the near future. The regulator focuses on enhancing liquidity in the US derivatives market which could limit the number of cryptocurrencies allowed for regulated derivatives. As a central question in the US regulatory sphere, accepting digital assets by the regulator will be a milestone for the industry. With the new strategic plan for 2020-2024, the CFTC Will create a framework to regulate and promote digital assets. Alongside the IPO dreams Coinbase has, this could be a huge catalyst for major adoption in North America.
Cryptocurrencies are unregulated assets in most parts of the world. Despite the discussions on international forums such as G20 about the regulation of crypto, there were no real efforts from major governments across the world. This could soon change as the US Commodity Futures Trading Commission will set sights on the sector. The CFTC says they will develop a holistic framework to promote innovation in digital assets dubbing digital assets as the 21st-century commodities. Innovation is usually thrown around by major crypto projects often but the regulator’s definition is much broader than this. The strategic plan offers more clarity on precisely how the regulator could deal with digital assets.
As a part of the plan to make commodity derivative markets resilient and to boost the institutional investors to join the market, the CFTC wants to promote liquidity and transparency among all trading assets. The markets are quite illiquid now and this focus means that only the top ten digital assets will make it. As the United States regulator for Commodity derivatives is a part of the crypto fight in North America, it seems that there is a good chance of winning. The agency also declared its belief in ETH and BTC and saying they are commodities not securities. The statement was backed up by the regulator issuing a license for regulated ETH futures to the crypto platform ErisX.
Also, as Coinbase acts on becoming a publicly-traded company, there are a few other catalysts in play that could boost the case for crypto. Regulators offer clarity on how digital assets are treated and there is a huge potential for new capital to flow into the industry.
Author: By TeamMMG
Comparing Apple to Bitcoin? Crypto Occupies a Class of Its Own
A recent article by a Cointelegraph Markets contributor proclaimed that “Bitcoin is the ‘new’ Apple,” explaining just how Bitcoin’s (BTC) price could reach $60,000 by 2023: “Bitcoin hangs near the chasm of the adoption curve, and its price looks similar to Apple’s stock in 2008 before it broke out with a 520% rally.”
The technology adoption curve referenced was Everett Rogers’ famous “diffusion of innovations” model, published in 1962, which described the five stages through which technology becomes “diffused” — i.e., goes mainstream: innovators, early adopters, early majority, late majority and laggards.
In 2008, manufacturer Apple’s United States smartphone penetration was stalled at about 11% and still waiting to cross the “chasm,” the gap between the “early adopter” stage and the “early majority” stages in the Rogers lexicon. Any technical innovation worth its salt needs to cross that threshold. Apple’s smartphone surmounted that chasm, of course: Usage exploded, and Apple’s share price soared into the ionosphere. Bitcoin may well be in a similar place today.
But this comparison, satisfying as it may be, raises some questions. Is BTC even a technology — like radios, PCs, and smartphones — or is it something different: unique, sui generis — i.e., in a class by itself? Is BTC’s global penetration really anywhere close to 11% — its putative U.S. penetration rate? Also, while smartphone usage indubitably crossed the chasm more than a decade ago, how does one extrapolate BTC’s future price from AAPL’s share price? Shouldn’t it be compared with smartphones’ price?
The resemblance between Bitcoin and Apple in terms of growth and adoption is indeed there, but in short, is it fair to compare Bitcoin to younger versions of tech giants like Apple?
Arvind Singhal, a professor of communication at the University of Texas at El Paso, whose academic research has focused on the diffusion of innovation, told Cointelegraph that Bitcoin did indeed seem singular: “It has tremendous barriers to adoption for most individuals and operates in a space of multiple familiar currencies — and that peculiarity would greatly influence its adoption.”
Michel Rauchs, the head of Paradigma — a consulting firm focusing on the digital assets sector — and a former research affiliate for the cryptocurrency and blockchain research program at the Cambridge Centre for Alternative Finance at the University of Cambridge, told Cointelegraph: “Bitcoin is not a technology in itself, and any comparison [with traditional technologies] is misguided.” He added: “It is a social/economic system,” a new monetary order that uses technology to represent its unit of accounts. “Technology is just a secondary component, a means to an end.”
Additionally, it may be important here to separate Bitcoin from the more generalized blockchain technology in which it partakes — or risk misapplying Rogers’s diffusion of innovation theory — suggested Theophanis Stratopoulos, PwC Chair Associate Professor at the University of Waterloo’s School of Accounting and Finance, who further explained to Cointelegraph:
“When decision-makers consider whether to implement blockchain — in, let’s say, their supply chain — they develop expectations in terms of the cost of making the investment — e.g., paying for the implementation of the software — versus the benefits, such as increased revenues or cost savings. It is the difference in expectations among decision-makers that explains the adoption cycle that was observed by Rogers.”
But Bitcoin does not behave the same way as other technologies typically adopted by firms — like CRM systems, for instance. “When it comes to Bitcoin, it’s the expected price that drives people to ‘invest’ in Bitcoin.” It is a matter of speculation, Stratopoulos continued, closer to a pyramid scheme than a capital expenditure. “If I believe that more people will want to hold Bitcoin in the future, the price of the Bitcoin will rise. In a case like this, it makes sense for me to ‘invest’ today rather than tomorrow.”
Oliver von Landsberg-Sadie, the CEO and founder of the BCB Group — a digital assets financial services group — agreed that BTC’s adoption cycle was anomalous, telling Cointelegraph: “The reason Bitcoin’s adoption path has broken formation with established adoption curves is quite technical: In the short term, the more users there are, the less useful it is as a currency.”
With more users, the Bitcoin network “self-regulates by raising the network fees as the mem pool bulges up in busy periods and breathes out in quieter ones.” But this makes Bitcoin less effective as a payments processing system. As von Landsberg-Sadie explained: “When fees are high, no one is going to pay a $5 transaction fee on a $5 coffee.”
Many technical solutions have been proposed to solve this dilemma, some in the form of forks, others like the Lightning Network project that makes use of a second layer, “but none have truly stuck in the core Bitcoin protocol, which has been the slowest to evolve.” The good news is that it is evolving, and the increase in off-chain transactions is reducing barriers, but all of this means one can’t expect Bitcoin to follow a classic Rogers technical adoption curve, according to von Landsberg-Sadie.
When U.S. smartphone penetration stalled at around the 11% mark in December 2008, Apple’s share price became volatile — three-month volatility stood at 92%, according to the July 6 Cointelegraph article. In June 2020, with BTC penetration at 11%, three-month volatility was at 64%, indeed also a very high figure.
But Stratopoulos was unimpressed. “I would not compare Bitcoin to the performance of Apple or Amazon or any other high-tech company. Rogers’s adoption cycle applies to innovations — emerging technologies — not to the price of stock.” Kevin Dowd, a professor of finance and economics at Durham University in the United Kingdom, agreed, telling Cointelegraph:
“Since BTC is a form of product, then the natural comparison is with Apple’s smartphone product. Apple’s share price might have risen strongly, but the better comparison is with the price of smartphones, which have not.”
“It is relatively easy to find correlations” — like between AAPL in 2008 and BTC in 2020, commented Stratopoulos. “It does not mean that there is causation,” or it could be just a spurious correlation.
What, then, can be said about Bitcoin adoption? If measured by awareness — e.g., recognition of the term Bitcoin — “then it has already entered the mainstream,” said Rauchs. A Blockchain Capital survey reported 89% awareness of Bitcoin in the U.S. as of Spring 2019. A U.K. Financial Conduct Authority survey conducted in December 2019, which was recently published, found that 73% have heard about crypto, compared to 58% in 2019.
As for BTC ownership, the Blockchain Capital survey reported: “In total, 9% of the [U.S] population owns Bitcoin — including 18% of those aged 18–34 and 12% of those aged 35–44.” The firm originally reported 11% but that was later corrected. In the U.K. survey, by comparison, an estimated “3.86% of the general population currently own cryptocurrencies.” This projects to approximately 1.9 million adults within the U.K. population (over 18) of roughly 50 million.
Rauchs finds the lower U.K. adoption estimate “more realistic” if generalizing; that is, he would peg crypto ownership at 3%–5% of the global population, which also includes indirect ownership — e.g., individuals participating in a pension fund that invests in Bitcoin. But this clearly means that all crypto is in the first half of the early adopter stage — nowhere near the so-called chasm.
It’s not much different for blockchain technology. Stratopoulos co-authored a paper on blockchain technology adoption — exclusive of cryptocurrencies — that concluded: “Despite the recent hype, the current adoption rate is relatively low, and blockchain has not become mainstream yet.”
Bitcoin clearly means different things to different people. “It’s most popular use today is as a store of value, while back in 2011, its principal use was as a payment method — for gaming” and other purposes, said Rauchs. Depending on its applications, different adoption curve scenarios are possible. For his part, Rauchs believes that BTC’s most likely future usage will be as an alternative, non-sovereign store of value.
According to von Landsberg-Sadie, Bitcoin’s true adoption pattern will be “more like a wave, oscillating higher at each cycle.” In this view, “the biggest bets are on the most extreme outcomes: Bitcoin will either ripple slowly out of relevance, or it will amplify meaningfully into the mainstream. My money is on the latter.”
In sum, BTC following the same growth pattern as Apple sounds like a fun version of what may happen, but ultimately, one shouldn’t quibble that it is “not based on a statistically valid experiment,” as Dowd reminded Cointelegraph. Still, according to several experts, it doesn’t make sense to compare Bitcoin to traditional technologies “because Bitcoin does not have the ability to create value — either in the form of increasing revenues or reducing costs,” as Stratopoulous noted. Moreover, global BTC penetration is arguably closer to 4% than to the 11% mark where smartphones stood in 2008, immediately before they went mainstream.
The Encrypted Messaging Dilemma: Balancing Censorship and Freedom
Encrypted messaging services have always presented a tough challenge for government agencies all over the world. On one hand, they allow for freedom of speech, but on the other, they enable miscreants and bad actors to facilitate nefarious deeds. In this regard, on July 2, European law enforcement authorities arrested over 800 individuals that were allegedly partaking in shady activities through the use of an encrypted chat service called EncroChat.
The messaging platform has servers based out of France and claims to provide users with “worry-free secure communications.” According to the BBC, EncroChat has a customer base of more than 60,000 people, more than 10,000 of whom are based in Britain. Immediately after the incident came to light, EncroChat’s official website and messaging service were put on temporary hold. To gain a better overview of the matter, Cointelegraph reached out to Tim Mackey, principal security strategist for design automation company Synopsys, who said:
“Authorities likely balanced the future value associated with identifying additional criminals against the already identified criminal activity. In effect, they may have determined that stopping a specific impending crime outweighed any potential returns from keeping EncroChat operational.”
A similar outlook is also shared by Brian Kerr, CEO at Kava, a multi-chain DeFi Lending platform, who said that the government was right in accessing Encrochat’s servers to put an end to the criminal activities happening on the network.
As issues related to data leakages — especially those in regard to various mainstream messaging services (such as Whatsapp, TrueDialog and Telegram) — continue to surface on a regular basis, many experts believe that it is worth exploring the subject of whether or not most encryption platforms today lay enough importance on privacy and customer security.
On the subject, John Jefferies, CEO of CipherTrace, a crypto forensics firm, told Cointelegraph that customer privacy should always be taken into prime consideration by platform developers of such end-to-end encryption messengers. He further emphasized the point by saying that it was especially important to focus on privacy during times like these (i.e., the COVID-19 pandemic), where increased usage of digital platforms could lead to more instances of hacks, privacy invasions and data leaks. Jefferies further added:
“Encrypted communication is nuanced so platforms must ensure they have effective implementation of SSL with certificates issued from a known root of trust utilizing strong cipher suites. To further improve security, multi-factor authentication should be available for users joining conferences and the system should double-check users on unknown devices.“
Similarly, Jonathan Zerah, head of marketing for Status Network, an encrypted messenger, told Cointelegraph that despite there being many “so-called privacy and security-oriented” communication tools available in the market today, most of the security features being offered were built atop protocols that place a large amount of ownership and responsibility on centralized companies.
He further added that more often than not, these centralized communication tools employ a client-server model to transport and route messages throughout the world as well as require users to input their phone numbers or email addresses to set up and create an account — sensitive data that most firms usually store and manage using lax security protocols. Zerah added: “This places a massive responsibility on the companies managing these platforms to protect that data and the servers that store it.”
Lastly, to mitigate privacy issues related to popular messaging apps, experts like Zerah agree that it is time to establish newer safety protocols that return ownership of data to the individual, remove centralized chokepoints and attack vectors seamlessly.
Recently, a bill was introduced into the United States Senate that effectively seeks to put an end to using end-to-end encryption in messaging services. A similar issue was also raised in the ministerial meeting of the nations that make up the “Five Eyes” intelligence community comprising Australia, Canada, New Zealand, the United Kingdom and the United States. These developments seem to suggest that law enforcement agencies all over the world are making a concerted effort to eliminate encryption-based privacy technologies.
In Mackey’s view, due to the growing number of data breaches in the world today, there is a steady increase in the volume of data protection legislation being set into motion. These legislative efforts aim to limit the range of data that businesses can collect while increasing the security of any sensitive information that businesses process and retain.
However, even though it may be appealing for governments to attempt to limit the use of encryption technologies under the auspices reducing criminal activity, the situation around EncroChat clearly shows that criminal groups can easily create their own workarounds if the need arises. In this regard, the recently tabled Lawful Access to Encrypted Data Act — which would require companies to implement ways to decrypt data upon court order — could become a viable way through which a fine balance between regulation and encryption could be established.
That being said, Chris Hauk, a consumer privacy advocate as well as author for Pixel Privacy, an online privacy and security blog, believes that no government agency should ever have the legal right to outlaw encrypted messaging platforms. Furthermore, he believes that providing any sort of backdoor access to law enforcement agencies could end up opening new avenues for bad actors to exploit, thus defeating the primary goal of any encrypted messaging platform.
While the idea of encryption service providers and government agencies coming to a common consensus on handling privacy-related matters sounds like a perfect outcome on paper, in actuality, such a vision seems far-fetched because any review of “harmful content,” by default, requires platform operators themselves to have direct access to their customer information.
Moreover, once such a backdoor is opened, there will be nothing stopping governments from having the ability to go through everyone’s personal correspondence under the guise of public safety — something that has already been suggested by whistleblower Edward Snowden and his team. Leaks in recent years have showcased how governments all over the world, particularly the United States, have been proactively working with tech companies to harvest data in a totally indiscriminate manner.
It’s also worth mentioning that implementing a blanket ban on end-to-end encryption isn’t really possible. While certain legal roadblocks can definitely be deployed, if developers continue to use and devise apps using the technology, there’s not much that anyone can really do. Thus, in essence, government agencies should try and come to an agreement with businesses running such services in order to curb illegal activities on their platforms.
Lastly, providing his point of view on this situation, Chris Howell, co-founder and chief technology officer of Wickr, a messenger with end-to-end encryption, told Cointelegraph that any encryption service can be used for good or bad.
Although it is disappointing every time that criminals exploit privacy-oriented messengers for their personal gains, he does believe the answer is not to ban such services or destroy encryption, privacy and security for everyone through the use of backdoor gateways. He said, “Our ability to protect data and intellectual property from these same bad actors via strong encryption, solid security products, etc. does far more good for mankind than harm,” adding that:
“I think when a service has privacy and security issues, its legitimate users suffer far more than its bad actors. Of course, no legitimate service wishes to be a haven for bad actors. Most of us expend significant resources honoring law enforcement information requests and believe it is our responsibility to do so. But the reason we build things is for customers and their needs, and I’m not hearing a lot of them ask us to weaken our security so that bad actors might suffer.”