The Quadriga cryptocurrency exchange that saw millions of dollars disappear just as its founder died was a "fraud" and Ponzi scheme, according to the Ontario Securities Commission. CBC.ca reports: The regulator said Thursday that Vancouver-based Quadriga's late founder Gerald Cotten committed fraud by opening accounts under aliases and crediting himself with fictitious currency and crypto asset balances, which he traded with unsuspecting clients. Cotten, the OSC said in a new report, ran into a shortfall in assets available to satisfy client withdrawals when the price of the crypto assets changed. He started running a Ponzi scheme that covered the shortfall with other clients' deposits, the agency determined.

"What happened at Quadriga was an old-fashioned fraud wrapped in modern technology," the OSC said. "Quadriga did not consider its business to involve securities trading and it did not register with any securities regulator. This lack of registration facilitated Cotten's ability to commit a large-scale fraud without detection. So did the absence of internal oversight over Cotten." On Thursday, the OSC attributed about $115 million of the $169 million clients lost to Cotten's "fraudulent" trading. Another $28 million was lost when Cotten used client assets on three external crypto asset trading platforms without authorization or disclosure. The OSC said he also misappropriated millions in client assets to fund his "lavish" lifestyle and because he was in sole control of the company ever since 2016, he "ran the business as he saw fit, with no proper system of internal oversight or controls or proper books and records." "Ernst & Young, Quadriga's bankruptcy trustee, was only able to recover $46 million in assets to pay out to clients," the report adds.

The most anticipated cryptocurrency event of 2020, Bitcoin's (BTC) third halving, has just taken effect. Occurring only once every four years, the latest Bitcoin mining block reward halving just reduced the Bitcoin block reward from 12.5 BTC to 6.25 BTC. Cointelegraph reports: Since the first Bitcoin block was generated back in 2009, there have been three halving events. Taking place once every 210,000 blocks mined, or approximately once every four years, a Bitcoin halving cuts the current miner block reward by 50%. The first Bitcoin halving event took place in 2012, cutting the original block reward from 50 BTC to 25 BTC. The second halving took place in 2016, with the reward dropping from 25 BTC to 12.5 BTC. As Bitcoin's supply is limited to 21 million coins, Bitcoin halving events should continue to take place until the year 2140, or until the 21-millionth BTC. By that time, the block reward should reach 1 satoshi, or the smallest unit of Bitcoin at 0.00000001 BTC. At the time of publication, the number of Bitcoin in circulation amounts to 18.37 million, according to Blockchain.com.

As the two previous Bitcoin halvings eventually impacted Bitcoin's price in positive ways, Bitcoin halvings have become the subject of diverse price predictions and speculation. While some crypto players have predicted that the third Bitcoin halving will have no effect on Bitcoin's price, others are confident that the halving will definitely affect the price of the cryptocurrency due to a cut in new Bitcoin supply.

Friday Forbes wrote that price of Bitcoin had dropped 10% over the previous 24 hours, dipping below the "psychological" $7,000 level. That's after starting the week at over $8,000, and less than a month after it rose to $10,000. Apparently cryptocurrencies had gotten some very bad news from China. Bitcoin rivals ethereum and bitcoin cash have led the market lower [Friday] morning, each losing over 12% of their value in the last 24 hours. Ripple's XRP, litecoin, EOS, bitcoin SV, and binance coin have all also been heavily sold off, wiping billions of dollars from the value of the combined bitcoin and crypto market. [Friday] morning the People's Bank of China has warned it will be cracking down hard on bitcoin and cryptocurrency trading in the country. "Once [bitcoin or cryptocurrency trading] is discovered, it will be disposed of immediately, and it will be prevented from happening early," read a People's Bank of China statement, translated through Google.

The Shanghai-based central bank also warned against conflating the country's interest in blockchain with bitcoin and crypto...

The bitcoin and cryptocurrency industry has been rocked by reports of Chinese police raids on the offices of major bitcoin and crypto exchanges Binance and Bithumb in the country over the last week -- though both have denied the raids took place.
But now that same Forbes columnist asks: Is this when to buy bitcoin? Among other reasons... As well as the May bitcoin halving, which will see the number of bitcoin rewarded to miners cut by half from 12.5 bitcoin to 6.25 bitcoin, bitcoin investors are hopeful next year will bring an increase in the number of bitcoin retail investors and people using bitcoin and cryptocurrencies for payments. Bakkt, a New York Stock Exchange-owner backed bitcoin and cryptocurrency venture, announced last month it plans to launch a consumer app for cryptocurrency purchases in 2020. U.S. coffee chain Starbucks will be its first launch partner, with the company one of the original backers of the crypto project, along with software giant Microsoft and Boston Consulting Group. Meanwhile, Bakkt's bitcoin futures daily volume hit a new all-time high this week, according to data from Intercontinental Exchange, with some $20.3 million across 2,700 futures contracts on Friday.

Many in the traditional financial industry remain unconvinced by bitcoin and crypto, however. This month, former European Central Bank president Jean-Claude Trichet slammed bitcoin and Facebook's crypto project, warning bitcoin is "not real" and not the future of money.

Bitcoin has a lingering problem that few people are talking about amid the renewed exuberance of the recent price surge. From a report: Hardly anyone is using the world's largest cryptocurrency for anything beyond speculation. Data from New York-based blockchain researcher Chainalysis show that only 1.3% of economic transactions came from merchants in the first four months of 2019, little changed over the boom and bust cycles of the prior two years. Even though marque companies such as AT&T now let customers pay with cryptocurrencies, the problem is that few speculators want to use the digital coins to pay for wireless services when the digital asset's price might surge another 50% in a matter of weeks. That's become the main dilemma with the cryptocurrency: Bitcoin needs the hype to attract mass appeal to be considered a viable electronic alternative to money but it has developed a culture of "hodlers" who advocate accumulation rather than spending.

Just 376 people hold a third of all Ether, the cryptocurrency that powers the Ethereum blockchain, according to new research by Chainalysis. From a report: Large holders are known in the crypto market as "whales," which Chainalysis defines as individuals who hold their assets in digital wallets and not on an exchange, Kim Grauer, a senior economist at the company, said in an interview. By comparison, 448 people own 20 percent of all Bitcoin, she said. Chainalysis also looked at the effect Ether whales have on price, and found that large holders don't move their cryptocurrency often. "The majority of whales aren't traders," she said. "They're mostly holding."

Masayoshi Son, the billionaire founder of SoftBank Group, made a huge personal bet on bitcoin just as prices for the digital currency peaked, losing more than $130 million when he sold out, WSJ (paywalled) reported Tuesday, citing people familiar with the matter. From the report (alternative source): Mr. Son, who launched the world's biggest venture-capital fund on the strength of his long-term investing acumen, made the investment at the recommendation of a well-known bitcoin booster, whose investment firm SoftBank bought in 2017, the people said. The investment came at the peak of the bitcoin frenzy in late 2017 after the digital currency had already risen more than 10 fold that year. The exact size of the bet couldn't be determined, but bitcoin peaked at nearly $20,000 in mid December 2017 and Mr. Son sold in early 2018 after bitcoin had plummeted, the people said.

Up to 95% of all reported trading in bitcoin is artificially created by unregulated exchanges, according to a new study [PDF], raising fresh doubts about the nascent market following a steep decline in prices over the past year. From a report: Fraudulent trading volume has dogged cryptocurrency trading for years, but the extent of the market manipulation has been difficult to determine. Bitwise Asset Management said its analysis of trading activity at 81 exchanges over four days in March indicates that the actual market for bitcoin is far smaller than previously thought. The San Francisco-based company submitted its research to the U.S. Securities and Exchange Commission with an application to launch a bitcoin-based exchange-traded fund.

The study, made public Thursday, is an attempt to alleviate the agency's longstanding concerns that a bitcoin ETF would leave investors exposed to fraud and market manipulation. Bitwise's fund, if approved, would be based upon the 5% of trading it considers legitimate, said Matthew Hougan, Bitwise's head of global research. That volume comes from 10 regulated exchanges that can verify that their trading data and customers are real. This slice of the market, he said, is well regulated, transparent and efficient. "I hope everyone sees there is a real market for bitcoin," he said.

A cryptocurrency exchange in Canada has lost control of at least $137 million of its customers' assets following the sudden death of its founder, who was the only person known to have access to the offline wallet that stored the digital coins. British Columbia-based QuadrigaCX is unable to access most or all of another $53 million because it's tied up in disputes with third parties. Ars Technica reports: The dramatic misstep was reported in a sworn affidavit that was obtained by CoinDesk. The affidavit was filed Thursday by Jennifer Robertson, widow of QuadrigaCX's sole director and officer Gerry Cotten. Robertson testified that Cotten died of Crohn's disease in India in December at the age of 30. Following standard security practices by many holders of cryptocurrency, QuadrigaCX stored the vast majority of its cryptocurrency holdings in a "cold wallet," meaning a digital wallet that wasn't connected to the Internet. The measure is designed to prevent hacks that regularly drain hot wallets of millions of dollars. Thursday's court filing, however, demonstrates that cold wallets are by no means a surefire way to secure digital coins. Robertson testified that Cotten stored the cold wallet on an encrypted laptop that only he could decrypt. Based on company records, she said the cold wallet stored $180 million in Canadian dollars ($137 million in US dollars), all of which is currently inaccessible to QuadrigaCX and more than 100,000 customers. "The laptop computer from which Gerry carried out the Companies' business is encrypted, and I do not know the password or recovery key," Robertson wrote. "Despite repeated and diligent searches, I have not been able to find them written down anywhere."

The mismanaged cold wallet is only one of the problems besieging QuadrigaCX. Differences with at least three third-party partners has tied up most or all of an additional $53 million in assets. Making matters worse, many QuadrigaCX customers continued to make automatic transfers into the service following Cotten's death. On Monday, the site became inaccessible with little explanation, except for this status update, which was later taken down. On Thursday, QuadrigaCX said it would file for creditor protection as it worked to regain control of its assets. As of Thursday, the site had 115,000 customers with outstanding balances.

The production-weighted cash cost to create one Bitcoin averaged around $4,060 globally in the fourth quarter, according to analysts with JPMorgan Chase & Co. With Bitcoin itself currently trading below $3,600, that doesn't look like such a good deal. However, there's a big spread around the average, meaning that there are clear winners and losers. From a report: Low-cost Chinese miners are able to pay much less -- the estimate is around $2,400 per Bitcoin -- by leveraging direct power purchasing agreements with electricity generators such as aluminum smelters looking to sell excess power generation, JPMorgan analysts led by Natasha Kaneva said in a wide-ranging Jan. 24 report about cryptocurrencies spearheaded by Joyce Chang. Electricity tends to be the biggest cost for miners, needed to run the high-powered computer rigs used to process data blocks to earn Bitcoin.

"The drop in Bitcoin prices from around $6,500 throughout much of October to below $4,000 now has increasingly pushed margins further and further negative for just about every region except low-cost Chinese miners," the analysts said, offering the caveat that their cost estimates may be skewed to the high side due to spotty data and conservative efficiency assumptions. The cost figures exclude equipment.

Binance, the world's largest cryptocurrency exchange based on trading volume, now lets users spend money they don't have thanks to the additional support for credit cards from Visa and Mastercard. From a report: The exchange announced Thursday that it has partnered with Israel-based payments processing firm Simplex to enable purchases with Visa and MasterCard credit cards. At launch, the exchange is supporting credit card purchase for bitcoin (BTC), ether (ETH), litecoin (LTC) and XRP. These can then be traded against up to 151 other tokens offered by the exchange. "The crypto industry is still in its early stages and most of the world's money is still in fiat," said Binance CEO Changpeng Zhao. "Building fiat gateways is what we need now to grow the ecosystem, increase adoption and introduce crypto to more users."

It turns out that cryptocurrency enthusiasts were committed well beyond the HODL rallying call that urged them to hold on during this year's digital-asset market collapse. From a report: The number of verified users of cryptocurrencies almost doubled in the first three quarters of the year even as the market bellwether Bitcoin tumbled almost 80 percent, according to a study from the Cambridge Centre for Alternative Finance. Users climbed from 18 million to 35 million this year. The figures may provide a silver lining. If user numbers continue to increase even in a deep market downturn, that could signal that an eventual recovery could be coming -- a crucial finding at a time when some critics predict that the value of cryptocurrencies will go down to zero.