Police Freeze Bank Accounts, Seize Luxury Cars in Probe of $22 Million ICO Promoter Vanbex

Canadian police have frozen assets owned by the founders of blockchain services company Vanbex, as part of a fraud investigation into a 2017 initial coin offering (ICO) that raised $22 million.

According to court documents dated March 13, the company, led by Kevin Hobbs and Lisa Cheng, raised $30 million CAD (about $22 million) worth of fiat and cryptocurrency through the sale of a token called FUEL.

Vanbex told investors that the token would be usable in a forthcoming smart contract system called Etherparty, and that “the value of the FUEL token would increase dramatically,” says the civil forfeiture action filed in the Supreme Court of British Columbia.

However, Vanbex “developed no usable products” and Hobbs and Cheng “did not intend to develop the products they were marketing but rather [acted] with [the] intention to misappropriate the corporately invested funds raised for their own personal benefit,” according to a filing by the director of civil forfeiture at Canada’s Ministry of Attorney General.

“FUEL tokens became virtually worthless in dollar value while not being capable of use in the non-existent smart contracts system or for any product or service other than a cryptocurrency coin creating service called Rocket,” which was different than what the purchasers were promised, the director claimed.

No criminal charges have been filed so far, and when reached by CoinDesk on Sunday evening, Cheng and Hobbs denied the fraud charges and said Vanbex is cooperating with the investigation.

But in response to the government’s application, Justice J.A. Power on March 14 authorized the government to seize the founders’ two Land Rovers; ordered Bank of Montreal to freeze Hobbs’ two accounts there containing slightly less than $1 million; and ordered him and Cheng not to sell, borrow against or damage their Vancouver condominium for at least 30 days, court papers show.

Vanbex’s response

In a statement provided to CoinDesk, Hobbs and Cheng called the fraud allegations “false,” and said that the investigations were the result of “false claims by a former contractor.”

The Royal Canadian Mounted Police (RCMP) began investigating Vanbex and its founders for fraud in May 2018 and the Canadian Revenue Agency subsequently began a tax probe, according to the filing.

The founders denied that they made any promises about the value of FUEL tokens, saying “the tokens integrate bitcoin and Ethereum and the value of any currency is beyond any company or individual’s control, obviously. … Fuel tokens pay for transaction fees on the network for Smart Contracts deployed through our architecture.”

Vanbex’s business accounts have not been frozen, they added.

They took issue with the government’s characterization of Vanbex in court papers as a shell company. “Vanbex is an operating company, which is easy to establish,” they said, adding that they have been in the crypto space since 2013.

Further, Hobbs and Cheng took issue with the authorities’ claim that Vanbex produced no usable products. “We have had more than 50 clients” – not two, as the court documents allege – “and we have two excellent products.”

‘High roller’

Still, the court papers go on to allege that Hobbs and Cheng “acquired sudden and substantial personal wealth” around the time of the ICO, purchasing two condominiums – the one in Vancouver, another in Toronto – for about $3 million each and the two Land Rovers, and leasing a Lamborghini for $375,000 a month.

Further, Hobbs spent some of the misappropriated funds on gambling “domestically and internationally at the high roller level,” according to one of the filings.

From September 2016 to March 2018, he withdrew a total of $1.3 million from casinos in British Columbia, one document alleges. In November 2017, the state-owned British Columbia Lottery Corporation put Hobbs on a “watch list,” preventing him from buying in at any of its casinos without proof of the source of his funds.

When Hobbs and Cheng became aware of the investigation, they started attempting to liquidate their assets, taking out mortgages against the condos and putting one of them up for sale, the document claims.

The court papers also note that Hobbs has a criminal record in Canada. He was convicted of possessing criminally obtained property and money laundering in 2008, for which was sentenced to nine months, and growing and trafficking in marijuana in 2009, for which he was sentenced to 30 months, the documents say.

In addition, he was busted for possession of pot in New York in 2005, for which he was given a one-year sentence, the Canadian government said.

Hobbs and Cheng told CoinDesk that he “has been a professional poker player in the past and has participated in poker tournaments around the world,” and “has never been prevented from [playing at] any casino.”

Cooperation ongoing

Employees have been “encouraged to cooperate fully with the investigation and they are,” Hobbs and Cheng told CoinDesk.

“We remain confident that the truth will prevail, and this will be behind us soon,” they said.

“Unfortunately, these things move at a pace beyond our control. In the meantime, we will continue to innovate and deliver quality products. Our counsel are working to put this astern in a fashion that decisively confirms our leading role in this industry, which we intend to maintain.”

They concluded by telling stakeholders:

“Thank you for your loyalty and trust. It is not misplaced.”

Vanbex civil forfeiture order by CoinDesk on Scribd

Lisa Cheng image via CoinDesk archives.

Ripple (XRP) Price Analysis: Further Gains Seem Likely

  • Ripple price corrected lower after trading as high as $0.3168 against the US dollar.
  • The price traded below the $0.3100 level, but the $0.3070 level acted as a decent support.
  • There was a break above a key bearish trend line with resistance at $0.3080 on the hourly chart of the XRP/USD pair (data source from Kraken).
  • The pair is likely to accelerate gains once bulls clear the $0.3120 resistance level in the near term.

Ripple price remained well bids on the downside against the US Dollar and bitcoin. XRP/USD is climbing higher and it could accelerate once again towards the $0.3150 and $0.3165 levels.

Ripple Price Analysis

This past week, we saw a solid upward move above the $0.3100 resistance in ripple price against the US Dollar. The XRP/USD pair even broke the $0.3150 resistance and settled well above the 100 hourly simple moving average. The price traded as high as $0.3168 and later it started a downside correction. Sellers pushed the price below the $0.3120 and $0.3100 levels. However, the price found a strong support near the $0.3070 level and the 100 hourly simple moving average.

A swing low was formed at $0.3070 and recently the price climbed higher once again. It broke the 23.6% Fib retracement level of the last decline from the $0.3168 high to $0.3070 low. Moreover, there was a break above a key bearish trend line with resistance at $0.3080 on the hourly chart of the XRP/USD pair. The pair is now trading nicely above the $0.3080 level and the 100 hourly SMA. On the upside, an immediate resistance is near the $0.3120 level.

Besides, the 50% Fib retracement level of the last decline from the $0.3168 high to $0.3070 low is also near $0.3120. Therefore, the price might struggle to clear the $0.3120 resistance area. If bulls succeed in gaining strength above the $0.3120 resistance, the price could retest the $0.3150 resistance. Any further gains will most likely increase the chances of a move towards the $0.3200 barrier.

Ripple Price Analysis XRP Chart

Looking at the chart, ripple price is trading nicely above the $0.3070 support and the 100 hourly SMA. Should sellers clear the $0.3070 support, there could be a downside extension. The next key support is near the $0.3030 level, where buyers are likely to emerge. Therefore, the $0.3070 support holds the key for more gains above the $0.3100 and $0.3120 resistance levels in the near term.

Technical Indicators

Hourly MACD – The MACD for XRP/USD is gaining pace in the bullish zone.

Hourly RSI (Relative Strength Index) – The RSI for XRP/USD is currently well above the 50 level, with a positive bias.

Major Support Levels – $0.3080, $0.3070 and $0.3030.

Major Resistance Levels – $0.3100, $0.3120 and $0.3150.

Ethereum Price Analysis: ETH Bulls Eye Fresh Highs Above $145

  • ETH price corrected lower recently and tested the $39 support area against the US Dollar.
  • The price found a strong buying interest near $139 and it recently bounced back.
  • There was a break above a declining channel with resistance at $141 on the hourly chart of ETH/USD (data feed via Kraken).
  • The pair is currently trading above the $142 level and it may continue to rise towards the $145 resistance.

Ethereum price stayed above important supports against the US Dollar and bitcoin. ETH is moving higher once again and it seems like bulls are eyeing a break above the $145 swing high.

Ethereum Price Analysis

Recently, ETH price started a downside correction after testing the $145-146 resistance area against the US Dollar. The ETH/USD pair corrected below the $143 and $142 levels. The price even broke the $140 support level and tested the key $139 support area. Buyers emerged near the $139 support and the 100 hourly simple moving average. After a downside spike, the price started a fresh upward move and traded above the $140 resistance level.

Later, there was a break above a declining channel with resistance at $141 on the hourly chart of ETH/USD. The pair spiked above the 50% Fib retracement level of the recent decline from the $145 swing high to $139 swing low. Ethereum price settled above the $142 level, but it faced hurdles near the $143 level. The 61.8% Fib retracement level of the recent decline from the $145 swing high to $139 swing low also acted as a resistance. At the moment, the price is currently consolidating gains above $142 and it may dip a few points.

On the downside, the $142 and $141 support levels might prevent declines. On the upside, a clear break above the $143 resistance could push the price towards the $145 resistance area. Above $145, the next target for buyers could be near the $150 level. On the downside, if there is an increase in selling pressure, the price may revisit the $139 support and the 100 hourly SMA.

Ethereum Price Analysis ETH Chart

Looking at the chart, Ethereum price is clearly holding key supports above the $139 level and the 100 hourly SMA. If bulls fail to defend the $139 support, the price may move into a bearish zone. The next key support is near the $137 level (the previous pivot level). Overall, as long as the price is above $139, it could continue to rise towards $145 and $150.

ETH Technical Indicators

Hourly MACDThe MACD for ETH/USD is gaining momentum in the bullish zone.

Hourly RSIThe RSI for ETH/USD is currently moving higher towards the 70 level.

Major Support Level – $139

Major Resistance Level – $143

Randomized Proof of Work, Privacy, and its Own Lightning Network: Usechain Makes Bold Promises

News

Randomized Proof of Work, Privacy, and its Own Lightning Network: Usechain Makes Bold Promises


The alpha version of the Usechain (USE) mainnet is now live, after more than one year in development. 


Usechain purports to be the first mirror identity blockchain project — but what does that even mean?

Randomized Proof of Work

According to Huining Cao, it’s all about Randomized Proof of Work (RPow). Cao told CNBC Africa’s Ran Neuner, according to a press release:

We map each person to the blockchain using Mirror Identity Protocol(MIP), so that each person can only have one account on the blockchain, there is a one-to-one correspondence. This allows us to use new consensus algorithm call Randomized Proof of Work(RPOW). Using RPOW, each account will receive a random number and this random number will be compared to a public random number to determine the likelihood of them to mine the next block. In this way, it will be very fast and energy efficient.

Providing Both Privacy and Regulatory Compliance?

The press release also notes that Usechain is apparently quite useful for law enforcement, as the network “can use multiple signature to have access to the ID information” of someone who uses the blockchain to evade taxes, fund terrorists, or launder money. (Nothing says economic freedom like the blockchain checking in on you.)

Though this sounds off-putting, Cao claims that Usenet almost miraculously provides privacy on top of this regulation-friendly behavior. HE stated:

However, the users also want privacy, so the hurdles to get to the intervention must be high; that’s why we use multiple signature. That is what we call a mirror identity. It is a muddled up identity that needs to be unscrambled. With this technology, we can build a blockchain platform that is compliant with regulation and provide financial services.

data privacy

Usechain’s Own Lightning Network

Usechain’s boldest promise, however, comes at the end of the press release, which states that it will “introduce lightning network-like channel technology in the future to scale up to one billion users.”

We’ll believe that when we see it.

What do you think of Usechain and its bold promises to provide regulatory compliance, privacy, and Lightning Network-like solutions? Let us know your thoughts in the comments below. 


Images courtesy of Shutterstock.

An Introductory Guide to Hashed TimeLock Contracts

An Introductory Guide to Hashed TimeLock Contracts

Smart contracts are central to the idea of creating decentralized communities where wealth and information can be exchanged under predefined terms without centralized intermediaries moderating the exchange.

One type of smart contract that is gaining lots of attention is the Hashed TimeLock Contract (or HTLC).

Hash locks are a type of encumbrance that restricts the spending of cryptocurrency funds until a specified piece of data is publicly revealed. A TimeLock is a type of smart contract that limits the spending of some cryptocurrency funds until a predefined block height or period.

This is a type of smart contract adopted in cryptocurrency channels to remove counterparty risk by enabling transactions to be time-bound. HTLC is often used in Atomic Swaps, which are direct transfers of cryptocurrencies between users without going through intermediaries like centralized exchanges.

The essential function of HTLC is to require the receiver of a payment to acknowledge having received the payment before a deadline.

The received payment is acknowledged by the user generating a cryptographic proof of payment. If the cryptographic proof is not generated, the user forfeits the ability to claim the payment, and the funds are returned to the payer.

Once a cryptographic proof is generated, it triggers the funds to unlock and become available to the recipient.

Hashed Time Lock Contracts Scenario

There are many scenarios in which Hash TimeLock contracts could be used, but the most popular being the exchange of two different cryptocurrencies in a cross chain transaction between anonymous participants.

Let’s say John has bitcoin and wants to exchange it with Sarah’s litecoin. An HTLC transaction between the two parties would function in the following way:

  1. Sarah uses her private key to generate a hash and sends it to John on the Litecoin blockchain. Sarah also creates a nominal transaction, which generates a pre-image of the hash. This is done to validate and finalize the transaction.
  2. John then generates his hash from his private key and sends it to Sarah. John also creates a pre-image through a Litecoin nominal transaction with Sarah.  
  3. Once Sarah receives John’s Litecoin transaction, Sarah uses her original key to sign it. John then signs off on the transaction on his end using his private key to unlock the funds from Sarah.

This process is best illustrated in a previous article on Atomic Swaps. Here, one can also see an illustration of Hash Timelock contracts between three participants:

(Source: Bitcoin Wiki)

Impact on Cryptocurrency Payments

As the previous example explains, HTLC provides many benefits to the

cryptocurrency payments process:

  1. Time Sensitivity: The time-sensitive nature of the transaction prevents the sender from having to wait forever to find out whether their payment went through. If the time runs out, the funds will just be sent back to the sender, so they don’t have to worry and can wait for the process to unfold.
  2. Validation of the blockchain: Transactions are validated because of the cryptographic proof of payment required by the receiver.
  3. Trustless system: As is the case with all smart contracts, trust is not needed as the rules are already coded into the contract itself. Hash TimeLock contracts take this one step further by implementing a time limit for recipients to acknowledge the payment.  
  4. Trading across multiple cryptocurrencies: HTLC makes Cross-chain transactions easier and more secure than ever. Cross chain transactions are the next step in the evolution of cryptocurrency adoption. The easier it becomes to unite the hundreds of blockchains that currently exist in silos, the faster the technology as a whole can begin to scale and achieve mass adoption.

HTLC in Traditional Industries

Beyond making cryptocurrency transactions more secure and trustless, HTLC can also have use cases in more traditional industries such as real estate.

If a real estate company needed to contract a developer within a limited period, they could use hashed TimeLock contracts to send the contractor a down payment once their development plan had been approved.

This would drastically reduce the amount of time needed to complete the transaction by removing all intermediaries from the process.  

Hashed Time Lock Contracts and Lightning Network

HTLC is already beginning to see adoption in the Lightning Network, which is a layer two scaling solution for the Bitcoin, Litecoin, and Monero blockchains. Lightning Network provides scalability by bundling smaller transactions “off chain,” and then recording them as one single transaction with many smaller components on chain.

The benefit that HTLC brings to the Lightning Network is that it allows payments to be routed safely through different peer-to-peer payment channels.

This means that users can pay other users without a direct channel opened between them. Together, HTLC and the Lightning Network are complementary solutions that allow the Bitcoin blockchain to not only scale but also achieve cross chain transactions in a trustless environment.

Hash TimeLock Contract challenges

Although HTLC provides many benefits, one of the biggest challenges that HTLC still faces is its unfamiliarity with the public.

A lack of understanding about the purpose and function of cryptocurrencies is still a major hindrance for the industry’s adoption. Even in 2019, a majority of the world’s population is still unfamiliar with what Bitcoin is, and in most developed countries, very few people know about it beyond what they’ve heard from mainstream media. This doesn’t even include the hundred’s of other cryptocurrencies and terms like “smart contract” or “consensus protocol.”

Conclusion

The key to HTLC achieving mainstream utility is in its ability to be simplified to the point where users and businesses can benefit from Hashed TimeLock Contracts without even knowing that they are using them.  

This sort of disguised adoption is common across all aspects of technology. Very few people are aware of the underlying protocols that make a Visa debit card function, or even the TCP/IP protocols that are used to interconnect network devices on the Internet. Hash TimeLock contracts can become mainstream in a similarly ubiquitous way. However, it first needs to be adopted by mainstream developer communities.

Fortunately, system architects across major corporations are a lot quicker to acknowledge the benefits of decentralized networks and trustless protocols, which bodes well for HTLC adoption and the growth of the cryptocurrency and blockchain industry as a whole.

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Yahoo Finance Drops Interview With Cardano’s Founder in Lieu of Lyft IPO Coverage

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Yahoo Finance Drops Interview With Cardano’s Founder in Lieu of Lyft IPO Coverage

yahoo-finance-drops-interview-with-cardano-s-founder-in-lieu-of-lyft-ipo-coverage

Charles Hoskinson, the creator of both Cardano (ADA) and an Ethereum co-founder, has recently seen his interview with Yahoo Finance get dropped over the initial public offering (IPO) of internet unicorn Lyft.

The transportation company was valued at roughly $20.5 billion in its IPO, as its shares were offered at $72, instead of at $62 to $68 as it was originally planned. Despite the rise in the offering, investors still kept on buying and brought Lyft (ticker: LYFT) shares to an $88 high before they started correcting.

Hoskinson, who was going to be interview by Yahoo Finance as part of broader tour on New York City, documented his experience on social media, revealed initially through a tweet he was about to go on the interview.

Since Lyft’s shares started soaring, however, Yahoo Finance decided to drop his interview to keep on covering the IPO as it was the day’s hot topic. After revealing he was dropped Cardano’s founder tried to support him by claiming the cryptocurrency is superior to Lyft’s offering.

Hoskinson revealed he had a bad experience with Yahoo Finance, as he claims the popular publication, as he claims the producers “didn’t seem to care and didn’t apologize for wasting our time.”

Yahoo Finance data shows that Lyft’s shares have since their high dropped, although they closed on Friday at $78.6, meaning investors who got in at $72 are already in the green. The company, however, hasn’t been making a profit, which could mean the price may still drop.

The S&P 500, the US stock market’s benchmark index, also went up this week, partly thanks to Lyft’s IPO. It closed at 2,834.4, up 0.67% for the day. ADA itself is currently trading at $0.07 after rising 0.8% in the last 24-hour period, according to CryptoCompare data.

The cryptocurrency notably made headlines last week after its successful 1.5 upgrade saw the price of its token surge by 22%. Hoskinson has revealed, while speaking to Cheddar, that the crypto industry is still looking for a “Bluetooth or WiFi moment.”