TokenReporter: Inside BCT

The Update

I’m a consulting editor for The Block now and I wanted to share one of the coolest stories I’ve edited in a while. Enjoy!

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MetaCert - After eradicating phishing on Slack in 2017 for the crypto world, MetaCert is now protecting over 1 million Crypto enthusiasts from phishing scams worldwide. Install their new email security service for iPhone.

HypeHop.com is an experimental 

Want to reach 5,000+ crypto fanatics? Email joanna@cabalpartners.com


Two identities, one man: the story of $800 million hedge fund fraudster Boaz Manor who led the alleged $31 million Blockchain Terminal ICO

BCT looked good on paper. 

It had an all-star team, a product that promised to give Bloomberg a run for its money – the aptly-named Blockchain Terminal, and funding to run a massive ICO campaign. The founder, a mysteriously well-capitalized investor, was zealously dedicated and he had gathered a community of investors that were champing at the bit to grab a piece of future riches.

It was the perfect product for the next generation of traders. Geeky enough for gearheads and familiar enough for Wall Streeters, the BCT was supposed to bridge the gap between enthusiasts on an exchange and hard-charging professionals. And it almost did.

In reality, many ex-employees said, BCT was a scam and that founding investor, a bearded Canadian with a quiet demeanor, was not who he claimed to be. In fact, they said, he was a known financial criminal. Those employees requested to speak anonymously, citing fear of reputation risk and physical danger.

Riding the initial coin offering wave, which took financial markets and media by storm at the end of 2017, this founder convinced large investors in Asia and Australia to pour millions into a token sale aimed at building out their terminal device. The firm shipped out dozens of the terminals to well-known crypto hedge funds. But the product itself, like the company, was a facade, according to former employees and investors.

At the heart of the venture is a man once jailed for running one of the most notable financial frauds in Canadian history: Boaz Manor. Working under the pseudonym Shaun MacDonald, Manor tricked BCT employees, investors, and potential customers and, in the process, created the definitive grift of this nascent crypto tech bubble.

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TokenReporter: Introducing HypeHop

The Update

This week I wanted to share something I’ve been working on over the past few months with a few friends. It’s called HypeHop and it pays you for watching videos. It’s really cool. Read on for more info.

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Typewriter.Plus offers white paper editing, website proofreading, and presentation management for startups. Our rates are low and our experts have worked at the New York Times, Gizmodo, and other amazing tech sites. Upload your document today or try our inexpensive Startup Pitch Pack.

MetaCert - After eradicating phishing on Slack in 2017 for the crypto world, MetaCert is now protecting over 1 million Crypto enthusiasts from phishing scams worldwide. Install their new email security service for iPhone.

HypeHop.com is an experimental

Want to reach 5,000+ crypto fanatics? Email joanna@cabalpartners.com


My New Thing: HypeHop

“How much is Apple/Microsoft/Google paying you to post this?”

As a journalist I’ve heard this over and over. The feeling that media is bought and paid for is very pernicious, very aggravating, and very frustrating. And, unless something is marked “Sponsored” online, it is wildly difficult to tell if someone has paid for your eyeballs.

So how do we separate paid content from real content? And how do we reward users for viewing our paid-for message?

One way is to pay content producers via micropayments or cryptocurrency. That hasn’t worked very well. Steemit and Civil, two solutions that weren’t made by actual journalists, are currently plummeting into the decentralized toilet.

So we decided to build HypeHop. It’s a tool that lets marketers pay for your time. Instead of being tricked into watching some garbage YouTube video so you can see an advertisement that you never wanted to watch, marketers (and average folks) must create compelling content and pay you to watch it. It flips the idea of advertising on its head, ensuring that everyone — the marketer, the content creator, and the user — all get what they want.

Further, we’ve also added a fascinating feature: the ability for the system to watch you as you watch the video. Because we need to ensure you’re watching these videos to collect your cash we’ve created a component that watches your face (and assesses your emotions) as you watch the video. Want to test to see if people will like your commercial? Try HypeHop. Want to understand how people react to a certain piece of visual data? Try HypeHop. Want to target investors with your startup pitch? Try HypeHop.

The system pays out in BTC and accepts BTC to post videos. This is because there is no sane way to accept micropayments in USD or any other fiat currency.

HypeHop is an experiment. I understand there are ways to game this system and we’re working on securing it further. We also understand crypto folks don’t like surveillance. That’s fine, we encourage them to avoid this service. The world is rapidly changing and our privacy is being stolen from us on a daily basis. At least, in this case, we pay your for it.

Check out this video to make a little money and see my 12-year-old son in his first acting role!


To Read:

Why do we take EOS seriously when it’s clearly a plutocracy?

An interview with David Silver: The attorney on a crusade to clean up crypto’s act

Do Ripple executives’ statements imply that XRP is a security?

The Update

You should join the Strike Telegram channel - Strike is a new financial community designed to build new startups from the ground up. It covers, supports, and funds startups and is a single source for the new token sale economy.

Sponsors

Proper Propaganda is a tech focused PR and digital agency that helps revolutionaries and agents of change craft and spread their stories. In the past three months the agency has helped ICO and blockchain clients raise over $52 million and get covered in key media outlets such as the BBC, Coin Desk, Digital Trends, Daily Express, Coin Spectator and Inverse. If you're looking to foment revolution, crush the armies of darkness and raise a giant pile of cash reach out to info@properpropaganda.net

Typewriter.Plus offers white paper editing, website proofreading, and presentation management for startups. Our rates are low and our experts have worked at the New York Times, Gizmodo, and other amazing tech sites. Upload your document today or try our inexpensive Startup Pitch Pack.

MetaCert - Protecting over 800k Crypto people from fraud / phishing scams. Install Cryptonite to avoid phishing scams.

Want to reach 5,000+ crypto fanatics? Email joanna@cabalpartners.com

Quick thought

You ever get a little burned out? Us, too. Sometimes, the news is discouraging. Sometimes, it looks as if people are using the tech in ways that don’t really attempt to push the boundaries of what’s possible, or don’t attempt to solve real problems.

There’s a lot of reinvention or reimplementation, without stopping to ask, ‘who has this problem, when was the last time they had it, and how big an issue was it to solve.’

For example, at the height of Bitcoin’s surge last year, Square Cash integrated BTC purchasing. Great, except that even with the high price of crypto, and the moderate adoption of Square Cash, it didn’t move the needle on crypto use or payments. A lot of Square Cash use is person to person, or person to small business. Having BTC in the Cash app wasn’t really solving anyone’s problem in the US, because the US dollar is fairly stable for paying personal debts.

So then we see people working on projects, with a fully developed app, that lets you fund an in-app wallet from an existing exchange and then make person to person payments easily. And it looked pretty slick and functioned as it should. And as I was talking with them, they asked,

One of the things we have been struggling with is that even if we change verbiage - what problem are we really solving?

Which for me is a “holy cow” moment. How would you let yourself develop a fully working application without knowing why you were doing it?

And what they learned was, “people primarily treat crypto as a speculative asset. So they don’t want to send it to anyone; They’re ok to receive it, but not send it out.”

It seems like that could have been learned by asking around, before they started developing a solution.

And that’s what it comes down to for me. Solve real problems, which leads to gaining adoption, and that leads to increased value. If there aren’t real problems, if we don’t make things a smoother, better, more reliable experience, there’s no reason to expect adoption, or expect value to increase.

If we don’t try a little harder, all the uses are going to be incremental, and replace settlement or record-keeping layers. The vast majority of people will never notice. That’s a mundane, boring, future.

Two token sales to watch 👁️

Coinciding with the news from the SEC, there’s a new type of token offering, the STO. What’s the difference? Well, a few things. In an ICO, the startup offers a coin, usually on someone else’s blockchain with a value rate established to something like ETH, and they’d have to manage both their startup and the financial offering of their coin. It makes building your startup exponentially harder, because you have to manage the value of the coin you created in addition to trying to ship your project. This backfires when you don’t manage the coin well, as seen with projects like World Wi-Fi, where buyers of the coin complain regularly about mis-management. Coins in an ICO aren’t shares.

The STO intends to be SEC compliant. Here, you’re still buying a token, but since security tokens are actual financial securities, your tokens are backed by something tangible like the assets, profits, or revenue of the company. All this is to say, we’re going to cover STOs and ICOs as the token sale landscape changes.

Here we go

BrikBit.io is setting up their own chain and token to turn Real Estate on its head. They want to set up a chain that addresses all sides of the Real Estate market, from building, investing, title transparency, all the way to helping people become homeowners. It’s this last part that appeals to me - what can you do to change the landscape for the person who has a job but can’t get a mortgage? The user story cited states, “Bruno is a young clerk living in a medium-sized town. He would like to partake in a Real Estate enterprise to be a future home- owner. His savings are not enough to cover the minimum entry-fee to buy an apartment, and his job contract is not enough of a guarantee to get a mortgage. Thanks to BrikBit, Bruno can purchase his own property one square foot at the time.” This has me interested. Of course, we’d need to read the whitepaper, first.

EndChain.io is making a blockchain for tracking and logitistics. Normal, so far, right? What’s interesting here, and they claim they have patents pending for, is a combined QR and barcode, which allows them to transition to blockchain while using existing scanners and inventory systems in concert. I know, I was talking about pushing the envelope, but with Walmart insisting all produce growers get on board with Walmart’s blockchain implementation to try and prevent losing all the lettuce in an e.coli outbreak, making adoption easier through existing infrastructure seems like a good idea. whitepaper is here.

The Good, the Bad, and the Ugly 😊😠👹

😊GOOD: 

Ohio Businesses Can Now Pay Taxes with Bitcoin

Ohio has just become the first state in the US to accept tax payments in Bitcoin, reports the Wall Street Journal. Starting this Monday, companies that want to settle their tax dues using cryptos can do so following three simple steps. They need to visit OhioCrypto.com, register, and pay. The crypto payment processor BitPay will handle the transfer and conversion to dollars for the tax office.

Ohio has been working to create a tech-friendly hub in the state and attract both blockchain developers and companies for a while now. However, it is not the first state to come up with the crypto tax payment scheme. Other states around the country have considered accepting Bitcoin, but those initiatives died before implementation.

Earlier this year, Arizona had passed a tax bill that would allow citizens to pay their taxes using cryptos. Sadly, in May, after passing the House final reading, the SB 1091 was vetoed by the Governor.

Back in February, Georgia introduced a similar bill to accept cryptocurrency as a valid form of payment for state taxes and licenses. Presently, however, the bill’s status reads “25% progression, died in committee.”

For now, only Ohio businesses are allowed to pay their taxes with cryptos. However, individuals can expect to be allowed to do the same in the near future.

😠BAD

Warning: Trezor One Fakes Flood the Market

Crypto hardware wallet provider Trezor has warned its customers about a new trick up the thieves’ sleeve that allows them to steal cryptos right from the hardware wallet. An imitation of a Trezor One device has hit the market.

In a Medium post, the company informs that the counterfeit device is manufactured by an anonymous vendor and replicates the Trezor One in such detail, it is almost impossible to distinguish the fake from the original.

To tell the two apart, remember to:

●      Watch out for deals that offer Trezor One at questionably low prices.

TokenReporter: WTF is happening to crypto?

are-you-serious-clipart-8.jpg

The Update

You should join the Strike Telegram channel - Strike is a new financial community designed to build new startups from the ground up. It covers, supports, and funds startups and is a single source for the new token sale economy.

Subscribe - 25% off first month

Sponsors

Typewriter.Plus offers white paper editing, website proofreading, and presentation management for startups. Our rates are low and our experts have worked at the New York Times, Gizmodo, and other amazing tech sites. Upload your document today or try our inexpensive Startup Pitch Pack.

MetaCert - Protecting over 800k Crypto people from fraud / phishing scams. Install Cryptonite to avoid phishing scams.

Want to reach 5,000+ crypto fanatics? Email joanna@cabalpartners.com


Four days ago the crypto markets were crashing hard. Now they’re crashing harder. Bitcoin, which hasn’t fallen past $6,000 for months, has dumped to $4,413.99 as of this morning, and nearly everything else is falling in unison. Ethereum, flying high at $700 a few months ago, is at $140. Coinbase, that bastion of crypto stability, is currently sporting a series of charts that look like Aspen black-diamond ski runs.

What is happening? There are a number of theories, and I’ll lay out a few of them here. Ultimately, sentiment is bleak in the crypto world, with bull runs being seen as a thing of a distant past. As regulators clamp down, pie-in-the-sky ideas crash and shady dealers take their shady dealings elsewhere, the things that made cryptocurrencies so much fun — and so dangerous — are slowly draining away. What’s left is anyone’s guess, but at least it will make things less interesting.

The bag holder theory

November was supposed to be a good month for crypto. Garbage sites like FortuneJack were crowing about bitcoin stability while the old crypto hands were optimistic and pessimistic at the same time. Erik Voorhees, founder of ShapeShift, felt that the inevitable collapse of the global financial system is good for folks with at least a few BTC in their wallets.

Others, like the Binance CEO Changpeng Zhao, are expecting a bull run next year and said his company was particularly profitable.

Ultimately, crypto hype moves the market far more than it has any right to, and this is a huge problem.

So who do you believe, these guys or your own lying eyes? That’s a complex question. First, understand that crypto is a technical product weaponized by cash. Companies like Binance  and Coinbase will work mightily to maintain revenue streams, especially considering Coinbase’s current level of outside investment. These are startups that can literally affect their own value over time. We’ll talk about that shortly. Ultimately, crypto hype hasn’t been matching reality of late, a major concern to the skittish investor.

“I think that the downturn is due to things not going up as much as people had wanted. Everyone was expecting November to be a bull month,” said Travin Keith, founder of Altrean. “When things indicated that it wasn’t going that way, those who were on borrowed time, such as those needing some buffer, or those in the crypto business needing some money, needed to sell.”

Tether untethered

Tether has long been the prime suspect in the Bitcoin  run up and crash. Created by an exchange called Bitfinex, the currency is pegged to the dollar and, according to the exchange itself, each tether — about $2.7 billion worth — is connected to an actual dollar in someone’s bank account. Whether or not this is true has yet to be proven, and the smart money is on “not true.” I’ll let Jon Evans  explain:

What are those whiffs of misconduct to which I previously referred? I mean. How much time do you have? One passionate critic, known as Bitfinexed, has been writing about this for quite some time now; it’s a pretty deep rabbit hole. University of Texas researchers have accused Bitfinex/Tether of manipulating the price of Bitcoin (upwards.) The two entities have allegedly been subpoenaed by US regulators. In possibly (but also possibly not — again, a fog of mystery) related news, the US Justice Department has opened a criminal investigation into cryptocurrency price manipulation, which critics say is ongoing. Comparisons are also being drawn with Liberty Reserve, the digital currency service shut down for money laundering five years ago:

So what the hell is going on? Good question. On the one hand, people and even companies are innocent until proven guilty, and the opacity of cryptocurrency companies is at least morally consistent with the industry as a whole. A wildly disproportionate number of crypto people are privacy maximalists and/or really hate and fear governments. (I wish the US government didn’t keep making their “all governments become jackbooted surveillance police states!” attitude seem less unhinged and more plausible.)

But on the other … yes, one reason for privacy maximalism is because you fear rubber-hose decryption of your keys, but another, especially when anti-government sentiment is involved, is because you fear the taxman, or the regulator. A third might be that you fear what the invisible hand would do to cryptocurrency prices, if it had full leeway. And it sure doesn’t look good when at least one of your claims, e.g. that your unaudited reserves are “subject to frequent professional audits,” is awfully hard to interpret as anything other than a baldfaced lie.

Now Bloomberg is reporting that the U.S. Justice Department is looking into Bitfinex for manipulating the price of Bitcoin. The belief is that Bitfinex has allegedly been performing wash trades that propped up the price of Bitcoin all the way to its previous $20,000 heights. “[Researchers] claimed that Tether was used to buy Bitcoin at pivotal periods, and that about half of Bitcoin’s 1,400 percent gain last year was attributable to such transactions,” wrote Bloomberg. “Griffin briefed the CFTC on his findings earlier this year, according to two people with direct knowledge of the matter.”

This alone could point to the primary reason Bitcoin and crypto are currently in free fall: without artificial controls, the real price of the commodity becomes clear. A Twitter user called Bitfinex’d has been calling for the death of Tether for years. He’s not very bullish on the currency in 2019.

“I don’t know the when,” Bitfinex’d said. “But I know Tether dies along with Bitfinex.”

Le shitcoin est mort

As we learned last week, the SEC is sick of fake utility tokens. While the going was great for ICOs over the past few years with multiple companies raising millions if not billions in a few minutes, these salad days are probably over. Arguably, a seed-stage startup with millions of dollars in cash is more like a small VC than a product company, but ultimately the good times couldn’t last.

What the SEC ruling means is that folks with a lot of crypto can’t slide it into “investments” anymore. However, this also means that those same companies can be more serious about products and production rather than simply fundraising.

SEC intervention dampens hype, and in a market that thrives on hype, this is a bad thing. That said, it does mean that things will become a lot clearer for smaller players in the space, folks who haven’t been able to raise seed and are instead praying that token sales are the way forward. In truth they are, buttoning up the token sale for future users and, by creating regulation around it, they will begin to prevent the Wild West activity we’ve seen so far. Ultimately, it’s a messy process, but a necessary one.

“It all contributes to greater BTC antifragility, doesn’t it?,” said crypto speculator Carl Bullen. “We need the worst actors imaginable. And we got ’em.”

Bitmain

One other interesting data point involves BitmainBitmain  makes cryptocurrency mining gear and most recently planned a massive IPO that was supposed to be the biggest in history. Instead, the company put these plans on hold.

Interestingly, Bitmain currently folds the cryptocurrency it mines back into the company, creating a false scarcity. The plan, however, was for Bitmain to begin releasing the Bitcoin it mined into the general population, thereby changing the price drastically. According to an investor I spoke with this summer, the Bitmain IPO would have been a massive driver of Bitcoin success. Now it is on ice.

While this tale was apocryphal, it’s clear that these chicken and egg problems are only going to get worse. As successful startups face down a bear market, they’re less likely to take risks. And, as we all know, crypto is all about risk.

Abandon all hope? Ehhhhh….

Ultimately, crypto and the attendant technologies have created an industry. That this industry is connected directly to stores of value, either real or imagined, has enervated it to a degree unprecedented in tech. After all, to use a common comparison between Linux and blockchain, Linus Torvalds didn’t make millions of dollars overnight for writing a device driver in 1993. He — and the entire open-source industry — made billions of dollars over the past 27 years. The same should be true of crypto, but the cash is clouding the issue.

Ultimately, say many thinkers in the space, the question isn’t whether the price goes up or down. Instead, of primary concern is whether the technology is progressing.

“Crypto capitulation is once again upon us, but before the markets can rise again we must pass through the darkest depths of despair,” said crypto guru Jameson Lopp. “Investors will continue to speculate while developers continue to build.”

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TokenReporter: The SEC has finally ruled on utility tokens (and it's not pretty)

The Update

You should join the Strike Telegram channel - Strike is a new financial community designed to build new startups from the ground up. It covers, supports, and funds startups and is a single source for the new token sale economy.

Sponsors

Proper Propaganda is a tech focused PR and digital agency that helps revolutionaries and agents of change craft and spread their stories. In the past three months the agency has helped ICO and blockchain clients raise over $52 million and get covered in key media outlets such as the BBC, Coin Desk, Digital Trends, Daily Express, Coin Spectator and Inverse. If you're looking to foment revolution, crush the armies of darkness and raise a giant pile of cash reach out to info@properpropaganda.net

Typewriter.Plus offers white paper editing, website proofreading, and presentation management for startups. Our rates are low and our experts have worked at the New York Times, Gizmodo, and other amazing tech sites. Upload your document today or try our inexpensive Startup Pitch Pack.

MetaCert - The new Trust and Reputation Protocol for the Internet. Get free security tools to protect your Crypto.

What to reach 5,000+ crypto fanatics? Email joanna@cabalpartners.com


The News

Crypto news got a little boost last week after a dark month of crashesstablecoins, and birthdays. The SEC ruled that two ICO issuers, CarrierEQ Inc. and Paragon Coin Inc., were in fact selling securities instead of so-called utility tokens.

"Both companies have agreed to return funds to harmed investors, register the tokens as securities, file periodic reports with the Commission, and pay penalties," wrote Pamela Sawhney of the SEC. "These are the Commission’s first cases imposing civil penalties solely for ICO securities offering registration violations."

From the release:

Airfox, a Boston-based startup, raised approximately $15 million worth of digital assets to finance its development of a token-denominated “ecosystem” starting with a mobile application that would allow users in emerging markets to earn tokens and exchange them for data by interacting with advertisements. Paragon, an online entity, raised approximately $12 million worth of digital assets to develop and implement its business plan to add blockchain technology to the cannabis industry and work toward legalization of cannabis. Neither Airfox nor Paragon registered their ICOs pursuant to the federal securities laws, nor did they qualify for an exemption to the registration requirements.

This behavior - a sort of "damn the torpedoes" for the Fintech set - was all the rage at the beginning of the year as no clear guidance was available for filing security tokens - essentially pieces of company equity - versus utility tokens which were, in theory, used within the company ecosystem. In fact ICOed companies contorted themselves into all sorts of knots to appear to fit their "utility token" within the torturous confines of securities law.

"We have made it clear that companies that issue securities through ICOs are required to comply with existing statutes and rules governing the registration of securities," said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division. "These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets."

The SEC fined both companies $250,000 each. Future ICOs, at least in the U.S., would do well to keep this in mind.

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