Author: Benjamin Lee
It goes without saying that Bitcoin and other forms of cryptocurrency have the potential to make or break fortunes in the blink of an eye. Unfortunately, one of crypto’s biggest strengths is also potentially one of its biggest flaws which is the relatively unregulated nature of cryptocurrency.
With dozens of new exchanges and e-wallet services appearing every other day with literally zero regulation, fraud and hacking are one of the biggest risks associated with investing in Bitcoin. As can be seen from the 2016 Bitfinex hack which resulted in losses of US$66 million, the risk are indeed very much real.
Along with this the relatively lawless nature (legislation wise) of the cryptocurrency industry makes it susceptible to moral hazard. Described as a situation in which an individual may be tempted to take extreme risks in an attempt to gain profits, the prospect of moral hazard is very real in the crypto world. Join us as we take a look at some of the biggest crypto scandals so far.
A dead CEO, accusations of a fraud and missing millions. All these make for an intriguing thriller that shook Bitcoin News, but for the thousands of customers who lost their holdings of cryptocurrency, the nightmare is very much real.
Back in 2018, the CEO of QuadrigaCX; Gerald Cotten passed away while honeymooning in India. Following this, his company QuadrigaCX announced that they were unable to gain access to the company’s deposits of cryptocurrency; a situation which immediately was a cause for alarm.
The reason behind this was QuadrigaCX used of cold wallets which are offline storage repositories that offer greater security from hacking. However, as Cotten was supposedly the only one with access to the passwords, the company was unable to return funds owed to their customer.
An investigation was launched into QuadrigaCX and this revealed several startling revelations. Firstly, after gaining access to Cotten’s laptop, audit firm Ernst & Young were able to track down all of the cold wallets owned by QuadrigaCX. However, the cold wallets that were supposed to hold between US$140 million and US$190 million worth of cryptocurrencies had been emptied.
Following the trail of money, Ernst & Young’s investigators discovered that funds had been systematically transferred out of the cold wallets an entire year prior to Cotten’s death. This left customers and investigators with a shell of company and zero currency.
Following these discoveries, several theories have been put forward with many believing that Gerald Cotten faked his own death to escape with millions. While his widow claims otherwise, the jury is still out on what happened to QuadrigaCX’s deposits.
- Mt Gox
Founded in 2010 by American programmer Jed McCaleb, Mt Gox actually stands for “Magic The Gathering Online eXchange.” Despite the odd name, Mt Gox would go on to become the world’s largest Bitcoin exchange, for a short time.
At one point, Mt Gox was estimated to have handled a whopping 70% of all Bitcoin transactions in the world. However, Mt Gox’s rise to fame was never smooth. From repeated security breaches, hack attacks, an incompetent CEO and even a lawsuit from the US government, Mt Gox was constantly plagued with legal and financial troubles.
Disaster struck in 2014 when Mt Gox declared bankruptcy after losing US$500 million worth of Bitcoins. It was discovered that hackers had systematically emptied out Mt Gox’s wallets without the knowledge of the company. When users complained that they were unable to withdraw their funds, Mt Gox when silent and disappeared from all social media.
To this day nearly 5 years after the debacle, creditors are still fighting to recover the funds owed to them by Mt Gox. In fact, the wait has been so long that some creditors have even chosen to sell their claims at a discounted rate. In some ways, you could even say that Mt Gox is the crypto equivalent of Enron.
NiceHash is a Slovenia-based crypto mining platform which brings miners and investors together. In December of 2017, Nice Hash was hit by an extremely sophisticated hack attack that invaded the system and resulted in a massive loss of 4 million 736 thousand 42 Bitcoins. Yes, the number of Bitcoins was so heart-wrenchingly big that we had to spell it out precisely.
At that point in time with Bitcoins being valued at roughly US$19,000 per Bitcoin, the total estimated losses would have been in the trillions. Further adding to the misery of all parties with the exception of the hackers, none of the money or Bitcoins were ever recovered. Consequently, the entire management team including CEO Marko Kobal resigned from NiceHash.
However, NiceHash was able to bounce back from this catastrophe and remained in business after salvaging their damaged reputation. To this day, NiceHash are still trading in Bitcoins and other cryptocurrencies.
From what we have seen, the world of cryptocurrency is an extremely lucrative yet risky proposition. Whether you’re an investor, speculator or crypto miner, it is vital that you stay on top of the game at all times. Keep in the know on the latest Bitcoin and cryptocurrency news with CEO World Magazine.
Is Bex500 an alternative to BitMEX?
An all around review of Bex500
Bex500 is a young but rapid-growing exchange, less adversarial than BitMEX, but with higher leverage than Binance, Bex500 has enough strings to attract many crypto traders.
Those dissatisfied with the old exchange, may find Bex500 exchange with a stable system with no manipulation or “overload”, pleasant UX, user-friendly tool kits, and around-clock customer service.
Bex500 says they are making crypto margin trading “easier” and giving you a better return.
Can they really achieve that? We conduct a comprehensive review as below to see if it is a trustworthy exchange
Question 1. What features does Bex500 have?
Bex500 offers perpetual BTC futures as well as three other cryptos including ETH, XRP and LTC, all paired against USDT. You may find Bex500 doing a good job aggregating most important features traders need for a robust trading experience with better return.
-A fair trade with no overload
Many traders are familiar with “overload” problem, which disables placing orders in peak trading times. It is suspected to be insider manipulations by exchanges which can cost users entire portfolios.
Bex500, with its unmatched TPS (claimed to be over 10,000 orders per second), ensures that the trading…
Five Strategies for Lowering Your Crypto Taxes
Getting taxes done isn’t always the highest item on everyone’s to do list. This is especially true if you have accumulated significant gains from investing in cryptocurrencies. What many investors often don’t consider are the opportunities to actually reduce their tax liabilities from their crypto investing. This article discusses five strategies that you can use to help minimize your crypto tax liability.
Depending on what country you live in, your cryptocurrency will be subject to different tax rules. The questions below address implications within the United States, but similar issues arise around the world. As always, check with a local tax professional to assess your own particular tax situation.
1. Tax loss harvesting
Tax loss harvesting is a common strategy in the world of investing where you sell your assets that will realize a capital loss. All you need to do is look at your investments and see which ones you bought for more than they are currently worth. By selling at a loss, you can potentially dramatically lower your net capital gains and thus reduce your taxable income. Given the market we are currently in, there are abundant opportunities to harvest losses and save on your tax bill. Cryptocurrency tax calculators have built specific tax loss harvesting tools that you can use automatically detect which coins present…
Will Bakkt Push Bitcoin into the Mainstream?
Bitcoin has been in a prolonged bear market for some time and has dropped as low as $8300 in recent weeks. This is the worst time for the cryptocurrency since prior to the bitcoin boom in 2017, and it has led to speculation that the original cryptocurrency could be on the decline. However, the digital asset may be about to bounce back. This could be thanks to Bakkt, the new digital asset platform which aims to provide a secure and well-monitored place for investors to trade bitcoin. Some analysts are even suggesting that this could lead bitcoin into the mainstream.
Bitcoin has been teetering on the edge of the mainstream for some time now, with various companies accepting payments in the digital currency. The reason why it hasn’t yet taken off is that it doesn’t have enough practical applications to encourage the everyday person to start using it. But the market is there for alternative payments, and this is particularly apparent in the online casino industry when new sites crop up. For example, Johnny Jackpot is a smashing new casino brand that accepts a number of payment systems including Neteller, Skrill, and Paysafecard. Global customers want to be able to use options like these which were designed for the internet.
The problem with all of the aforementioned systems…