Crypto News: June 25, 2018

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The FBI and NSA worked hard to criminalize encryption technology in the 1990s. They tried everything from outright bans to mandatory custody of encryption keys by law enforcement.

At the time, these organizations argued the odds of nefarious activity drastically increased when the government was not privy to the activities and information of those using encryption technology. This is the classic argument of “if you’re not doing anything wrong, what do you have to hide?”

The idea of individual privacy as a basic right for US citizens was completely lost during the great encryption debate of the 1990s. Eventually individual privacy won, law enforcement was held in check, and encryption is now considered an industry standard across the internet.

Unfortunately we haven’t learned from history though.

One of the top officials in the US Secret Service recently testified in front of the House of Representatives Committee on Financial Services Subcommittee on Terrorism and Illicit Finance, where he said:

“We should also consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies, services intended to obscure transactions on blockchains (i.e. cryptocurrency tumblers or mixers) and cryptocurrency mining pools.”

In layman terms, the Secret Service is currently asking for increased legal or regulatory action on privacy coins (ZCash, Monero, etc). While there is a lack of clarity on what their proposals are, it wouldn’t be surprising for the suggestions to include criminalization of use or even an outright ban.

The United States isn’t the only government taking notice though. In Japan, the Financial Services Agency has pressured a number of crypto exchanges to delist privacy coins. This pressure has been carried out in private, but expect it to become more public if anyone objects to the requests.

In conclusion, we’re currently watching the encryption debate of the 1990s play out with privacy coins. Government organizations are scared by things they (1) don’t understand, (2) don’t have access to, and (3) can’t use to surveil the population. While they present a compelling argument, the privacy of individuals should prevail. And don’t be surprised if eventually the industry standard evolves to include the features of today’s privacy coins.

The more things change, the more they stay the same.

THE RUNDOWN:

$1 billion Bitcoins lost in Mt. Gox hack to be returned to victims: A Japanese court ruled Friday to pull infamous Bitcoin exchange Mt. Gox out of bankruptcy, opening the door for at least $1 billion worth of cryptocurrency to be paid back to the company’s former customers. Read more.

Robinhood doesn’t care if it makes money on crypto trading: Robinhood, whose valuation surged from $1.5 billion to $6 billion after integrating cryptocurrency, said that the company does not expect to generate large profits in the near future, and the company is fine with it. “We don’t intend to make very much money on it at all for the foreseeable future,” Robinhood CEO Tenev said. “We intend to operate it as a breakeven business.” Read more.

Chinese police arrest crypto miner for power theft: Authorities in China have arrested a man for allegedly stealing a significant amount of power in order to fuel a clandestine cryptocurrency mine. Police in the eastern Chinese province of Anhui Province seized more than 200 computers used for bitcoin and ether mining after the local power grid company reported a spike in electricity use. Read more.

Four blockchain entrepreneurs win $100K Thiel awards: The Thiel Foundation, created and funded by billionaire investor and PayPal co-founder Peter Thiel, announced its 2018 class of Thiel Fellows on Friday. Among this year's recipients are Vest co-founder Axel Ericsson, Polkadot co-founder Robert Habermeier, MyCrypto CTO Daniel Ternyak and Mechanism Labs co-founder Aparna Krishnan, according to a press release. Read more.

South Korea to invest $230 million in blockchain tech development: The Ministry of Science and ICT of South Korea revealed a Blockchain Technology Development Strategy, earmarking a total of 230 billion Won (over of $200M USD) for the development of blockchain-based technology. Read more.

Bitfinex's chief strategy officer leaves crypto exchange: Bitfinex Chief Strategy Officer Phil Potter is leaving the cryptocurrency trading platform. Potter will be replaced in the interim by Chief Executive JL van der Velde, the company said. “As Bitfinex pivots away from the U.S., I felt that, as a U.S. person, it was time for me to rethink my position as a member of the executive team,” Potter said in a statement. Read more.

The crypto couple living a nightmare: Arthur and Kathleen Breitman created a crypto platform called Tezos, decided to go down the ICO path, and hoped to raise about $20 million. Tezos, to their surprise, went on to raise $232 million in the largest ICO to date. That surprise turned to dismay, as the project descended into rancor, litigation, and even the rumor of an international assassination plot. Read more.