Michael Kaydar, a 19-year-old suspect in a slew of bomb threats using Google Voice and bitcoin was arrested by Israel’s anti-fraud squad at his home in southern Israel.

The man is also is accused of threats made in Europe, Australia and New Zealand as well as to the Israel Police (is that not the bone-head move of the century? oh wait, that prize goes to the Coin.MX folks).

To hide identity and cover his tracks, Kaydar used common technologies used by most on the internet to protect their privacy including SpoofCard, Google Voice, and bitcoin. Police subpoenaed SpoofCard allowing them to trace the call’s real number that was a Google Voice number. 

SpoofCard accepts bitcoin payments, and the method in which Kaydar paid to cover his financial tracks and used VPN proxies to mask his IP address. 

In addition, Kaydar masked his voice in the calls to sound like a woman.

Police didn't have to start digging through the blockchain however, because Kaydar managed to shoot himself in the ass forgetting to route through a proxy server which allowed police to trace his IP address all the way to his house. 

This is one of those cases where two words pretty much sums this entire pile of poor decision making and the execution thereof ... operator error.




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Bitcoin will be bitcoin. Make no mistake about it. It's volatility is part of it's excitement among traders and how profit is made by day traders and retailers while the over all price over time has increased for those going long.

In the last week we've seen bitcoin as high as $1300 and as low as $950. Now sitting at about $1016 on the dinbits index, it's starting to attract like minded company. Altcoins.

Dash, Ether, Monero, Litecoin, and ZCash

The big five of Altcoins have really been tearing up the upwards climb as of late. Dash was up over $100, while ZCash hit over $75. Ether hit record highs in the $40's and Monero continues to show it's not to be forgotten about either.

So much so that we've added it to out altcoin index list.

Like bitcoin these digital assets are volatile as well if not more so and many of them on very weak networks which promotes some security concerns as well. 

Dash, Monero, and ZCash have additional scrutiny from regulators given their additional privacy, and Ether has a twin, Ether Classic, as a result of a hard fork everyone warned against but nobody listened and the result was about as suspected. Although it's important to note that Classic (ETC) likely would have faded away had it not been for Ethereum supporters themselves attacking the original Ether when it decided not to go away. This fueled an armada of assistance that came to the aide of ETC to fend off 51% attacks threatened by the Ethereum community.

Point being, in this industry its still a bit Wild West and this is evident in the volatile market rates. Bitcoin is likely the most stable, but Dash and especially Litecoin have been around for a while.

Here's how they stack up.


With the exception of Litecoin and the initial offering of ZCash, all-in-all it's been a slow rise with spikes to their peaks for most of the larger coins.

Volatility may not change anytime soon, but one thing is apparent. Digital assets are becoming more and more popular... and valuable.

Get on it!



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SAP (NYSE: SAP) has joined the Linux Foundations Hyperledger project as a Premier member. Hyperledger, who's news of late has been primarily surrounded IBM's Clouware based ledger, is an organization who is currently focused on distributed ledgers and may have some plans for blockchain based applications in the future, however, to date they haven't focused on blockchain based applications and have aimed their resources at distributed ledgers, also known as DLT.

In fact Hyperledger has stated publicly that they currently have no plans for tokenized or incentive based networks which limits their scope to only DLT's. 

The Giant Awakens

Unless you've been living under a rock your entire life, you likely know SAP, they are the oldest software company on the planet and the 2nd largest (next to Microsoft) overall. Their flagship ERP system, SAP, has been around for nearly 50 years. 

It's morphed over the years as SAP R/2, SAP R/3, mySAP (that's what we get for allowing the 90's), and in its current form SAP ECC (ERP Central Component).

In many ways SAP is the grandfather of distributed technology. Most of the DLT's available now aren't even necessary if you operate SAP since SAP can do all of this stuff. It's robust Workflow system allows for cross-organization approvals and almost everything we've seen from the DLT and blockchain efforts can already be done within SAP including consensus. However, consensus would require modifications so there is no current offering from SAP for this functionality. 

There's two things it cannot do however. It cannot

  1. Provide the level of security that something like bitcoins blockchain can; or,
  2. Ensure immutable transaction recording.

On that same note, neither can anything Hyperledger or IBM currently offers so it seems apparent that SAP is interested in the consensus. Quite possibly to incorporate this functionality into its workflow system for cross-company and cross-organization transactions.

Putting consensus into SAP is rather simple if all organization are running SAP. SAP's IDOC's (Intermediate Documents) and come basic ABAP customization's could be easily implemented for that. 

The hat trick is when other organizations are not running SAP. Currently that requires EDI, Middleware, or VAN's (value added networks) along side paper contracts to govern the transactions. 

DLT would help alleviate some of that between parties that trust each other or are forced to trust each other because of signed paperwork and armies of attorneys.

In SAP customary blanket and vague form, they state they are planning to use blockchain technology in existing and new business scenarios.

“We believe blockchain is a transformative technology for enterprise businesses. We are committed to advancing its adoption via the creation of new standards, use cases, platforms and open applications,” said Juergen Mueller, Chief Innovation Officer, SAP. “In joining Hyperledger, we plan to share our expertise and knowledge to help bring open distributed ledger technology to all businesses.”

Hyperledger is not working on blockchain technology, despite what their marketing material might state, but the open distributed ledger part is accurate. Someone else likely wrote that statement anyway, so we'll just leave it at that.

“Having support from an enterprise software and cloud leader like SAP is an important step in the right direction,” said Brian Behlendorf, Executive Director, Hyperledger. “The diversity of our members is a real strength, as we look to advance open blockchain technology POCs, pilots and production deployments across many industries this year. I couldn’t be happier to see the level of collaboration and progress that is happening among our community right now.”

They'll have gained some educational value from SAP who's code base is primed for DLT. The difference is however that SAP requires a central server and some SAP databases are 50 terabytes or more with multiple application servers required for operation. 

That leads to some interesting challenges, for SAP to realistically use DLT, it would need to integrated a limited amount of transactional data with the larger central system and likely the direction they will head. 

As part of SAP’s Premier membership, Dominik Heere, Vice President, Innovation Engineering, SAP Innovation Center Network, will represent the company on the Hyperledger Governing Board.




Article by John Leonard 
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You likely saw the drop, then the rebound this weekend, you might remember BitcoinXT from 2015, you've most likely heard of the scaling debate, and if nothing else, you certainly may have noticed the damn blockchain network is slow and getting worse.

The fundamental problem is that the block size of 1MB is no longer sufficient to support the current load. It needs to be increased.

Past Attempts

The scaling debate, or block-size debate is nothing new by any means. In fact its been a topic of discussion for years. Back in 2015 we successfully tested the BitcoinXT network which aimed for 75% adoption in early 2016.

Needless to say, it didn't pan out ad subsequently led to the infamous Mike Hearn rage-quitting incident they left bitcoin pronounced dead....again.

Bitcoin didn't die, Mike Hearn is likely kicking himself in the ass for selling all of his bitcoin pre-1000, XT didn't get 75% adoption, and at the end of the day a year later we still have the same damn problem.

The only difference is that this time its getting more critical.

Current Attempts

Classic, Core, Segwit, XT, and others have stepped up to the plate only to met with low adoption. The latest of the is Bitcoin Unlimited which has nudged Core from its 75% adoption.


Bitcoin Unlimited gives miners the option to configure what size blocks they can accept, which builds on what XT attempted a year ago. Bitcoin Core's approach is SegWit (Segregated Witness) which many are of the opinion doesn't fully address the issue.

Meanwhile a few major exchanges have decided that they will collaboratively and preemptively list BTU/XBU in addition to current BTC/XBT symbols and consider bitcoin unlimited a different digital asset.

It is also important to note that Antpool's new massive 22 petahash facility is pro-Unlimited and responsible for 15%+ of that adoption all by itself.

Word on the Street

To be completely honest, whereas there was allot of curiosity and interest in the various choices for implementation, everyday people have gone from asking questions to demanding results. They are simply fed up with slow transactions as a result of packed blocks.

That said, allot of mainstream media is simply blowing this out of proportion again and quite frankly nothing as is going to happen today or tomorrow. We saw this panic with XT, and here it is again. Bitcoin is fine now and it'll be fine tomorrow. Fortunately despite the $100+ drop in market price Friday, bitcoin has recovered and back above the $1000 mark.

All in all a resolution needs to find it's way to full adoption soon.Regardless of how impressive a 22 petahash mining facility may sound ... it only sounds good until you try to send a bitcoin somewhere.

So what does all of this mean for the majority? Not a damn thing ... yet.



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Was anyone around last year? You know, when the Ethereum network decided to hard-fork? It was one of the most chaotic events in virtual currency history that grew into one of the largest hacks in virtual currency history and the split into two networks, both of which exist today. Ethereum and the original Ethereum, Ethereum Classic.

Well now bitcoin developers, miners, and industry folks are discussing doing something similar and the market reaction has resulted in the $200 drop. China couldn't take it down, regulation couldn't take it down, and not even the EFT rejection  could take it down .... but a hard fork? Merely the mention of this makes people cringe.

Simply put, a hard fork could potentially destroy bitcoins current value of which could take a year or longer to recover, if ever.

Then the big question is going to be, which chain is bitcoin? The original? Or the new chain?

Generally speaking the longest chain would be recognized as bitcoin but purists would lean towards the original chain as bitcoin. You may well end up with a bitcoin classic (see below)


Contingency Plan

Over 20 exchanges have already put a plan in place to handle this. It won't be "bitcoin classic", rather it will be called "bitcoin unlimited" and be listed as BTU and XBU (bitcoin will remain BTC and XBT) on major exchange platforms.

The group released a conbined statement saying:

As exchanges, we have a responsibility to maintain orderly markets that trade continuously 24/7/365. It is incumbent upon us to support a coherent, orderly, and industry-wide approach to preparing for and responding to a contentious hardfork. In the case of a Bitcoin hard fork, we cannot suspend operations and wait for a winner to emerge.

Then of course there's other concerns about when a hard fork hits, if transactions are all going to be routing through the second chain as well among other things.

Bitcoin dropped as low as $944 before rebounding back over $1000 and now sits at $1009.73, if you are in a position to buy, this may be a perfect opportunity, many took advantage of the mid $900's on early Saturday.

Get on it!



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New York - A federal jury convicted New Jersey pastor Trevon Gross and Florida tech consultant Yuri Lebedev on Friday on charges of aiding unlawful bitcoin-dollar exchanges and to obstruct a government investigation.

After five days of deliberation and one month of trial before U.S. District Judge Alison M. Nathan, both men who claimed "they knew nothing" have been found to have known everything.

Gross and Lebedev were found guilty of scheming with ex-president of Coin.MX, Anothony Murgio, and others take over the credit union Gross controlled, Hope FCU. Prosecutors were able to convince the jury that the two lied to the National Credit Union Administration (never lie to these guys, or your bank) when regulators began investigating Hope FCU's operations back in 2014.

Lebedev also was convicted of wire fraud, bank fraud and fraud conspiracy for leading banks to believe the operation wasn't dealing in bitcoin.

"Lebedev and others bribed Trevon Gross so they could have a captive credit union to process those transactions, undermining the credit union’s safety and solvency. Despite elaborate efforts to hide their schemes, the defendants’ conduct was exposed at trial and found for what they were, federal crimes,” Acting U.S. Attorney for the Southern District of New York Joon H. Kim said in a statement.

Sentencing for the defendants is set for July 20th, 2017.

Defense Attorney Reaction

Lebedev counsel Eric Creizman said his client was a “marginal figure” in the Coin.mx scheme and that the trial had proven that. dinbits.com reported the same opinion recently. Creizman plans to make this a point during sentencing in hopes of a lighter sentence.

“On behalf of Pastor Gross, we will now seek a judgment of acquittal from the court and — if and when the time comes — a fair and lenient sentence,” his counsel Henry E. Klingeman of Krovatin Klingeman said.

Gross, as we previously stated, may not be so fortunate to receive any such leniency as it became overwhelmingly apparent over the course of the trial that a guilty verdict was probable.

Meet Coin.MX Team



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The cast and crew of the sunken ship that was Coin.MX. The poster-child company of exactly what not to do in the United States when operating a bitcoin exchange.


Anthony Murgio 
Coin.MX Founder

Status: Plea Bargain

Arrested July 21st, 2015, Murgio has since plead guilty to three counts, including conspiracy to operate an unlicensed money transmitting business and conspiracy to commit bank fraud. 

He is currently awaiting sentencing.




Trevon Gross
Pastor
Former Chairman of the Board, HOPE FCU

Status: Convicted

Found guilty of accepting over $150,000 in bribes as the Chairman of the Board of the credit union that served primarily low-income local residents in New Jersey.

Sentencing on July 20th


Trevon Gross charges:
  1. Receipt of commission for procuring loans (receipt of corrupt payments as an officer of a financial institution)
  2. Receipt of corrupt payments with intent to influence an officer of a financial institution
  3. Conspiracy to operate an unlicensed money transmitting business; make & receive corrupt payments; obstruct an examination of a financial institution & make false statements
  4. Receipt of commission for procuring loans (receipt of corrupt as an officer of a financial institution)


Michael J. Murgio
School Board Member
Father of Anthony Murgio 

Status: Plea Bargain, Sentenced

Murgio Sr. lied to the National Credit Union Administration. He's already pled guilty to the charge. Remember kids, it's a federal offence to lie to a financial institution.  He was sentenced to 1 year probation and a $12,000 fine on January 27th.




Ricardo Hill 
Coin.MX Marketing Manager 
Business Development Coordinator

Status: Plea Bargain

Plead guilty to seven counts on January 17 including bank fraud, wire fraud and conspiracy to operate an unlicensed money-transmitting business


Jose M Freundt 
Coin.MX Secretary.

Status: Plea Bargain

Freundt plead guilty to conspiracy to operate an unlicensed money transmitting business, operating an unlicensed money transmitting business and conspiracy to corruptly make payments to an officer of a financial institution, each of which carries a maximum sentence of 5 years in prison; and (oh there's more) one count of corruptly making payments to an officer of a financial institution, one count of conspiracy to commit wire fraud, and one count of wire fraud, each of which carries a maximum sentence of 30 years in prison. 

Yuri Lebedev

Coin.MX Operator

Status: Convicted

Yuri, like Gross, was convicted of bribery. He was also convicted of wire fraud, bank fraud, and conspiracy for lying to the banks and obstructing a regulatory investigation.

His original charges:
  1. Conspiracy to make corrupt payments (two counts)
  2. See #1 (2nd count)
  3. Conspiracy to make corrupt payments with intent to influence an officer of a financial institution
  4. Making corrupt payments with intent to influence an officer of a financial institution
  5. Conspiracy to operate an unlicensed money transmitting business; make & receive corrupt payments; obstruct an examination of a financial institution & make false statements
  6. Receipt of commission for procuring loans (making corrupt payments with intent to influence and officer of a financial institution)
  7. Attempt and conspiracy to commit wire fraud & bank fraud
  8. Fraud by wire, radio, or television
  9. Bank fraud

As of March 17th, 2017 all legal actions against all parties have concluded resulting in the above.



The IRS filed a motion in federal court to force Coinbase hand over all of their customer's personal records in response and accordance with the “John Doe” summons the agency filed back in November of 2016.

Coinbase stated on their blog:

Our legal team is in the process of reviewing the IRS’s motion. We will continue to work with the IRS to assess the government’s willingness to fundamentally reconsider the focus and scope of the summons. If it does not, we anticipate filing opposition papers in court in coming months. We will continue to keep our customers updated as to status.

In a nutshell the IRS wants all customer records without reason to do a discovery of the data to see if anyone did anything wrong, this includes years the IRS didn't even have a formal opinion on virtual currency. 

It's beginning to look like this may go 12 rounds.





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In an bill proposed Wednesday, Alaska outlines bitcoin and other virtual currency regulation with great detail. Perhaps the most detailed amendment we've seen aside from the New York "Bitlicense".

The states who have passed specific regulation on virtual currency have broadly amended current statutes, with the exception of New York who created an entire new virtual currency license (Bitlicense).

Alaska's proposal isn't vague, hard to understand, or broad beyond clarity. It's specific, detailed, and covers how Alaska would regulate bitcoin and other virtual currencies with great specificity.

The bill, HB180, has amendment Sec. 06.55.855. that define virtual currency as:

Virtual currency. In this chapter, a reference to virtual currency shall be broadly construed to cover digital units of exchange that
(1) have a centralized repository; in this paragraph, "centralized repository" means a single third-party administrating authority that controls the system, issues the currency, establishes the rules for the currency's use, maintains a
central payment ledger, and has authority to redeem the currency or withdraw the currency from circulation;
(2) are decentralized, distributive, open-source, math-based, peer-to-peer virtual currency with no central administrating authority and no central monitoring or oversight; in this paragraph,
(A) "distributive" means validated through distribution among a network of participants who run an algorithm to validate the transaction;
(B) "open-source" means available through software that can be downloaded for free from an Internet website to send, receive, and store virtual currency; or
(3) may be created or obtained by computing or manufacturing effort. 

Repealed and re-enacted Section 58. AS 06.55.990(15) now includes the term "virtual currency" under what constitutes "money transmission":

(15) "money transmission" means ...
(C) conducting the following types of activity in this state or involving a resident of this state:
(i) receiving virtual currency for transmission;
(ii) transmitting virtual currency;
(iii) securing, storing, holding, or maintaining custody or control of virtual currency on behalf of others;
(iv) buying and selling virtual currency as or through a third party;
(v) performing retail conversion services, including the conversion or exchange of fiat currency or other value into virtual currency, the conversion or exchange of virtual currency into fiat currency or other value, or the conversion or exchange of one form of
virtual currency into another form of virtual currency; or
(vi) controlling, administering, or issuing virtual
currency; 

Alaska seems to be taking the New York side of the NY/TX divide where New York is for heavy regulation and Texas is for more realistic regulation of virtual currency. Up until yesterday Alaska was a gray area, but it is now clear what regulators hope to accomplish.



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The jury on the trial of New Jersey pastor Trevon Gross and Florida tech guru Yuri Lebedev, who are accused in Manhattan federal court of fraud, will enter a 4th day of deliberation. 

The jury so far has appeared to have an issue with jurisdiction, specifically if the charges against the men are enforceable.  A note sent to U.S. District Judge Alison J. Nathan read:

Your honor we have a question in regards to establishing venue, Is where the money is spent or where it could be spent, based upon previous spending habits, a fair measure for establishing venue?”

The jury was directed to guidance from Judge Nathan that said "any act in furtherance" of the crimes would be sufficient to establish venue if it took place in the Southern District of New York..

The jury also seems to be getting a bit wary of the entire ordeal. One juror stated "I know my decision, but we've all got to work together,", another referenced a scheduling conflict next week, and a third will be out potentially due to an illness (sick of this BS perhaps?).

Coin.MX Trial Analysis



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