Pakistan Government to Put the Searchlight on Bitcoin Traders Says Local Media

Powerful Pakistan government and media officials appear to be contradicting the domestic population’s embrace of bitcoin.   

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Pakistan Government on the Defensive, Maybe

Karachi, Pakistan’s Dawn, a widely circulated and read periodical and website in English, is rather cosmopolitan. Covering bitcoin, however, its website curation seems to have a decidedly negative slant.

Pakistan Herald Publications Limited is Dawn‘s owner, and its CEO is Hameed Haroon, noted regional journalist and member of a highly influential family in the country.

In one dispatch from Mr. Haroon’s flagship, reprinted all over the world, the headline announced, “FBR goes after bitcoin traders.”

Pakistan Government to Put the Searchlight on Bitcoin Traders Says Local Media
Faisal Khan’s only evidence Pakistan’s government is paying any attention to bitcoin.

FBR is Pakistan’s Federal Bureau of Revenue, its principal collector of tax.

“The top intelligence department,” the piece insisted, “is investigating cases where investors trade digital currencies probably to evade taxes or launder money.”

The sentence-inserted link refers to the site’s own coverage of bitcoin reaching 1000 USD early this year. Not a single reference to FBR nor an investigation.

“A senior tax official said people evade tax and launder money using cryptocurrencies,” the article asserts without a single quote or reference. “They buy bitcoin to launder their tax-evaded money […], adding that they park their black money out of Pakistan in many cases.”

Paraphrases are allowed, of course, but this drove news.Bitcoin.com to search relevant Pakistani government pronouncements on bitcoin specifically, cryptocurrencies generally.

Nothing.

The Dawn piece goes on in this manner, listing a veritable alphabet soup of agencies and investigators and laws employed to hunt bitcoin traders without citing a documented source.

Pakistan Government's and Street's Tensions with Bitcoin
Screen Shot of SBP by Faisal Khan, showing no reference to the bank’s position on bitcoin.

What Blogs and Independent Sites Know

Faisal Khan, financial technology scout for venture capitalists and payments consultant, based in Turkey, blogged his similar bafflement.

After he too read the Dawn piece, he “wanted to explore the basis under which these raids are being conducted and wanted to comment on this further.”

He searched and searched.

Mr. Khan writes, “I’ve searched […], trying to find any circular &/or notification, gazette, SRO, press release, etc. related to Bitcoin &/or Cryptocurrency – but I could not find it.”

His knowledge of Pakistan’s legal history is impressive, and he cites all the documents he examined.Pakistan Government's and Street's Tensions with Bitcoin

“For bitcoin to be considered for money-laundering,” Mr. Khan notes, “it has to be defined into an asset class whereby [bitcoin] has been declared [money] or some form of an asset as per ‘some’ legal definition in some law in Pakistan.”

He concludes, “Right now, the Government of Pakistan in no way recognizes [bitcoin] as legal tender or legal ‘anything.’ It has no legal standing under any law in Pakistan.”

Since the series of articles in Dawn, bitcoin seems to be capturing the attention of Pakistani rupee holders anyway.

Localbitcoins exchange activity in the region as of this writing has risen exponentially, matching a global pattern.

Citing Japan’s approach, long-time Pakistani commodity trader Shahan Rehman urged acceptance “by a country compels people to jump on the bandwagon, increasing its price massively.”

As of now, official government pronouncements are not available to the public.

Are Pakistan’s laws on bitcoin just not available digitally? Is the government on purpose holding back? Tell us in the comments below.

U.S. Pressures BTC-e Exchange as They Plan to Distribute Funds Next Month

Last week the Russian bitcoin exchange, BTC-e, told the public about the trading platform’s plan to repay customers. Now the exchange is back and says there will be a full update come August 30 and the organization will follow with daily announcements. Further, BTC-e answered multiple questions from customers who want access to their funds.

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Releasing 55% of Funds & Pressure from the U.S.

U.S. Pressures BTC-e Exchange as They Plan to Distribute Funds Next MonthEarlier this summer news.Easypaypakistan reported on the cryptocurrency exchange BTC-e being taken down by U.S. law enforcement for connections to bitcoin laundering and illegal money transmissions. Following the FBI arresting alleged employees and seizing funds, the exchange announced on August 3 it had control over its servers and “some of its bitcoin purses.” The trading platform has released a few messages through Twitter and the forum Bitcointalk.org over the course of the past two weeks.

In those messages the exchange spoke of rebranding, working with other partners, and utilizing a unique in-house token to pay customers back similarly to how Bitfinex handled their hack. Now the exchange says come August 30th the organization will update customers every day.

“To date, there is a process of transferring digital resources to an investment company,” explains BTC-e’s latest announcement. “The company is preparing the resource for our launch. As it was announced earlier, at startup users will be able to withdraw 55% of the funds.”

We want to notify all users that there is a political background in closing our service and pressure from the U.S.

BTC-e Claims Fully Functional Exchange is Coming and Bitcoin Cash Refunds

The exchange also fielded questions from forum visitors who said they lost a lot of money due to the trading platform “going under.” Many of the traders were not happy with waiting and called BTC-e’s situation a “circus.” “There was a problem, and we will try to solve it in the shortest possible time,” the exchange says to upset clients. Another person stated that he needed his money now and called the exchange “evil.” BTC-e responds by saying that if it were possible funds would have been given out earlier and the real ‘evil’ resided with a “flag with a bunch of stars.”

The organization says they are hoping to open this September and will publish a “FAQ” in the near future. The FAQ was delayed due to an agreement with lawyers, BTC-e explains, and they can’t release it until the investigation completes. The exchange also answers a trader who asks if the exchange will have only “minimal functionality” and the company seems to think trading will be fully operational. Moreover, the exchange also detailed when they disperse customer holdings next month, Bitcoin Cash (BCH) will also be given to customers at a 1:1 rate.

What do you think about BTC-e’s recent announcement? Let us know in the comments below.

Greek Authorities Arrest Suspected BTC-e Mastermind

123Suspected BTC-e mastermind, Alexander Vinnik, was arrested on Wednesday whilst vacationing with his partner in Northern Greece. The 38-year-old Russian is suspected of directing a criminal organization accused of laundering over $4 billion through BTC-e since 2011. Accusations of Vinnik’s involvement in laundering bitcoins that were stolen during the devastating hack that resulted in Mt.Gox’s insolvency are also mounting.

 

BTC-e Is Currently Offline, Hosting a Static Front Page Displaying the Message “Site Is Under Maintenance. We Apologize for the Inconvenience.”

Greek Authorities Arrest Suspected BTC-e Mastermind

A 38-year-old Russian man has been arrested in Northern Greece for his suspected role in the operation of the shadowy bitcoin exchange BTC-e. The man, Alexander Vinnik, is accused of having facilitated the laundering of over $4 billion worth of bitcoin since 2011. Vinnik is currently in the custody of the Thessaloniki Court of Appeals, pending an application for his extradition to the United States to commence.

BTC-e is currently offline, hosting a static front page displaying the message “Site is under maintenance. We apologize for the inconvenience.” Updates are being provided via the exchange’s Twitter account.

The arrest was carried out by Greek authorities working in partnership with US agencies. The FBI had been surveilling Vinnik for over a year, as documents pertaining to his arrest make reference to a Webmoney account that was accessed from a luxury Abu Dhabi hotel in May 2016. Electronic equipment is reported to have been seized from his hotel room.

Evidence Is Compiling Linking Vinnik to the Mt.Gox Hack That Saw $2.1 Billion Worth of Customers’ Bitcoin Stolen

Greek Authorities Arrest Suspected BTC-e Mastermind

Greek have police made an official statement regarding the arrest, stating that “an internationally sought ‘mastermind’ of a crime organization has been arrested. Since 2011 the 38-year-old has been running a criminal organization which administers one of the most important websites of electronic crime in the world.” The US Department of Justice has described BTC-e as “one of the largest entities in the field of electronic money laundering and money laundering in the world”, stating that the company’s “illegal proceeds come from a number of high-level piracy, ransom repayment systems, drug trafficking and tax systems”.

Evidence is also compiling that links Vinnik to the infamous of Mt.Gox hack that saw approximately $2.1 billion worth of customers’ bitcoin stolen. Wizsec claims that approximately 300,000 bitcoin stolen in the hack was laundered via BTC-e. Crucially, their reports suggest that many of the stolen bitcoins were immediately moved from wallets owned by Vinnik to BTC-e internal storage, rather than customer deposit wallets. Similar patterns have also been identified in the circulation of bitcoin “stolen from Bitcoinica, Bitfloor and several other thefts from back in 2011 and 2012.”

Do you think that Vinnik will be extradited to the United States? Share your thoughts in the comments section below!

August 1 Will Be the Potential Disruption of the Bitcoin Network

If you’ve been listening to the bitcoin ‘community,’ you’d know in about two weeks the bitcoin network may face some protocol changes. Due to the possible user-activated soft fork (UASF) planned and the chance some groups may counter this plan, this has created thousands of discussions concerning August 1. Now the bitcoin-focused web portal Bitcoin.org has issued a warning on the site that informs users of a “potential network disruption.”

 

August 1st and the Potential Network Disruption

Bitcoin users everywhere are getting prepared and heavily discussing the possibility of a blockchain split. The subject was discussed a lot this past March when bitcoin proponents and cryptocurrency businesses feared a potential split when the Bitcoin Unlimited implementation was seeing strong support. Now the conversation has resurfaced, but the topic of UASF or BIP148 is an entirely different scenario.

August 1 and The Potential Disruption of the Bitcoin Network

UASF (BIP148) is a mechanism designed to start on August 1st, at 00:00 UTC that activates a soft fork enforced by full nodes. After this point, full nodes participating in this plan will reject blocks that have not upgraded to BIP141 otherwise known as Segregated Witness (Segwit). At press time there are 1095 total UASF nodes out of 7896 reachable bitcoin nodes globally according to Bitnodes. UASF requires a lot of industry support and miners to activate Segwit, by this point if they do not support the activation the chain could diverge into two.

August 1 and The Potential Disruption of the Bitcoin Network

Currently, there are businesses that have announced initial support for BIP148 such as Abra, Trezor, Samourai Wallet, Electrum, Coinomi, Mycelium and roughly 37 other organizations. However, there are many wallets and a vast majority of exchanges that have not announced any support or issued warnings about the upcoming August 1st Segwit enforcement. This includes a significant amount of wallet providers and exchanges including Bitstamp, Kraken, Bitfinex, Gemini, BTCC, Poloniex, and many more. One relatively small exchange in Switzerland called Bity has warned its customers the platform will be halting trading on August 1st.

Bitcoin.org’s Warning

On Wednesday, July 12, 2017, 08:00:00 GMT Bitcoin.org issued a warning in regards to the potential network disruption that may take place on July 31, 20:00:00 GMT/August 1st, 00:00 UTC.

“Bitcoin confirmation scores may become unreliable for an unknown length of time,” explains the network disruption warning. “This means that any bitcoins you receive after that time may later disappear from your wallet or be a type of bitcoin that other people will not accept as payment.”

Once the situation is resolved, confirmation scores will either automatically return to their normal reliability, or there will be two (or more) competing versions of Bitcoin. In the former case, you may return to using Bitcoin normally; in the later case, you will need to take extra steps in order to begin safely receiving bitcoins again.

August 1 and The Potential Disruption of the Bitcoin Network

The warning gives users some preparation guidelines and possible outcomes for during and after the UASF event. This includes not trusting payments during this time, and not sending payments until after the dust has settled. Even the maintainer of the website Bitcoinuptime.com says that there may be “potential bitcoin downtime from the upcoming BIP148 fork” and the network’s 99.991523267% uptime will have to be updated. Further, there was an issue concerning the Bitcoin.org alert over the wording “Bitcoin may be unsafe to use starting July 31st” in contrast to saying “potential network disruption.” The developer who made the change writes;

Note: I object to this change, which I think makes the alert less clear, less forceful, and degrades alert usability.  I make this change only because the Bitcoin.org site maintainer insists upon it.

GDAX Issues a Statement Concerning UASF

Following Bitcoin.org’s disruption alert one large bitcoin exchange has come forward issuing a warning and how the company will handle the August 1 situation. The cryptocurrency trading platform GDAX, a subset of Coinbase announced there will be a temporary suspension of deposits, withdrawals, and possibly trading on August 1. GDAX executive Adam White says, “the activation of UASF may create two blockchains,” and outlines how the company plans on handling the possible fork. If August 1 results in two chains, GDAX states;

  1. One blockchain becomes dominant, resulting in the other blockchain having low community adoption and value.
  2. Both blockchains are adopted, co-existing and operating independently of one another with roughly equal community adoption and value.

In either scenario, we will implement safeguards to ensure the safety of our customers’ funds. For example, we will temporarily suspend the deposit and withdrawal of bitcoin on GDAX and may pause the trading of bitcoin as well. This decision will be based on our assessment of the technical risks posed by the fork, such as replay attacks and other factors that could create network instability.

Bitcoin ABC

Another possible scenario to think about is the “Bitcoin ABC” (Adjustable Blocksize Cap) implementation that was revealed by the software engineer, Amaury Séchet at The Future of Bitcoin event in Arnhem. The project has released its latest client Bitcoin ABC 0.14.2 and says it’s a full node implementation of Bitcoin that removes Segwit code and replaces it with an adjustable block size cap. During the initial announcement, Séchet detailed that Bitcoin ABC is part of the user-activated hard fork contingency plan against BIP148.

August 1 and The Potential Disruption of the Bitcoin Network

In essence, the ABC protocol prepares for any disruptive risks associated with UASF activation and could also activate during the August 1st “Flag Day” as well. Besides being a contingency plan, the UAHF protocol will move the block size cap towards the activation of emergent consensus where users can decide block size themselves. Bitcoin ABC could counter the BIP148 soft fork which could cause network disruption, and a possible blockchain split as well.

Meanwhile, the Segwit2x Plan Moves Forward In the Midst of Egos and Constant Bickering

Alongside these two alternative plans, the Segwit2x working group has also been steadily preparing the compromise idea announced called the “New York Agreement.” The group released beta code and have been experimenting with the Segwit protocol and a 2MB hard fork on a Bitcoin testnet. So far there has been a lot of bickering about Segwit2x between the project’s lead developer Jeff Garzik, Bitcoin core developers, and the Blockstream CEO Adam Back. Many core supporters refuse to compromise on Segwit2x calling it “Franken-segwit” and a great majority of core developers have rejected supporting the idea. However, some core maintainers have been making comments on Segwit2x’s Github and the working group’s Slack channel. There is still uncertainty concerning the New York Agreement plan, but the working group is still moving along as August 1st gets closer.

As far as August 1st is concerned users should make sure they hold their private keys. There is a possibility of network disruption and Bitcoin.com will inform our readers of everything people need to know, including exchange updates, trading, withdrawal and deposit suspensions, and any other important information that arises in regards to this specific date.

What do you think about August 1st? Do you think there will be any potential network disruption or do you think nothing will happen at all? Let us know what you think in the comments below

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin Price

Japanese companies continue to benefit from embracing Bitcoin, following its approval by the government as a form of payment. Small businesses listed on stock exchanges that offer bitcoin-related services are seeing their share prices rise as the price of bitcoin spikes.

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Bitcoin’s Gains Spilling into Traditional Stock Markets

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin Price
Prime Minister Shinzo Abe

On April 1, Prime Minister Shinzo Abe’s government legalized bitcoin as a form of payment. The law, which enforces strict rules on bitcoin exchanges, gives the digital currency more credibility. Many companies subsequently began integrating bitcoin into their business models, with some forming partnerships with small bitcoin startups.

As bitcoin becomes more widely accepted in Japan, its price rises sharply. The cryptocurrency has risen approximately 180 percent at press time since the beginning of the year, according to data from Japan’s largest bitcoin exchange by volume, Bitflyer.

Meanwhile, small exchange-listed companies that have started incorporating bitcoin into their businesses are seeing a similar pattern in their share prices. A well-known Japanese day trader, Naoki Murakami, said that “All of these gains coincide with bitcoin’s rally,” Bloomberg reported on Monday. He explained:

That has made the stocks of these small-cap companies an attractive way for speculators to invest in cryptocurrency markets without buying them directly. […] Not everyone is sure they can trust bitcoin exchanges. And some don’t have accounts there. That’s why they’re using the stock market to speculate.

“From about a month ago when all these virtual currencies started spiking like crazy, we began seeing the so-called ‘stocks of the virtual currency bubble,”’ he noted.

In addition, he explained that Japanese stock markets have relatively loose listing requirements, therefore many small companies are able to go public with “no income and a market value of as little as $10 million.” That is why the Tokyo Stock Exchange is home to hundreds of small companies, he explained, adding that:

It’s probably not a coincidence that Japan’s stock market is being seen as a proxy for bitcoin investments.

Here are Some Winners

Among companies that are seeing their stocks rally after they announced businesses relating to digital currencies are Remixpoint Inc, Infoteria Corporation, and Fisco Ltd, according to Bloomberg.

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin PriceRemixpoint Inc. is the largest of the three companies, having a market value of about 31.3 billion yen ($283 million). The company opened a bitcoin exchange, Bitpoint, at the end of May before announcing its plans to install over 100,000 ATMs nationwide. Its stock has more than doubled in value since the partnership with Peach Aviation to bring bitcoin payments to the airline, Bloomberg noted. “Remixpoint is trading at 514 times earnings, the highest among all Japanese technology companies worth more than 30 billion yen.”

Japanese Companies Embracing Bitcoin See Stocks Soar with Rising Bitcoin PriceInfoteria Corporation partnered with bitcoin exchange platform developer Tech Bureau and is testing ways to use blockchain technology for proxy voting. The company saw its shares up more than 50 percent in the past month. Similarly, financial information services provider Fisco Ltd. began operating a bitcoin exchange last year and is up about 25 percent since early May, the news outlet detailed.

When the price of bitcoin fell, these companies’ share prices also experienced a similar downturn. However, overall, their gains have significantly outweighed their losses.

Do you think these companies will continue to benefit from bitcoin’s price rise? Let us know in the comments section below.

Federal Board Of Revenue goes after bitcoin traders In Pakistan

5925dda2f0facISLAMABAD: The top intelligence department of the Federal Board of Revenue (FBR) is investigating cases where investors trade digital currencies probably to evade taxes or launder money.

The State Bank of Pakistan (SBP) does not recognise cryptocurrencies, such as bitcoin. These digital currencies are also traded as commodities.

A senior tax official said people evade tax and launder money using cryptocurrencies. They buy bitcoin to launder their tax-evaded money, he said, adding that they park their black money out of Pakistan in many cases.

The anti-money laundering cell of the Directorate General of Intelligence and Investigation, Inland Revenue (I&I-IR) started investigating on Wednesday the financial affairs of people having huge investments in cryptocurrencies, including bitcoin.

Tax evasion is a predicate offence under Anti-Money Laundering Act 2010. The government has appointed the Directorate General of I&I-IR as investigating and prosecuting agency in cases where tax-evaded money is laundered.

According to the tax official, the trade of bitcoin is on the rise in Pakistan. The initial inquiry revealed that bitcoin is being traded mostly against cash in the country.

The current price of bitcoin is hovering around Rs200,000. Upon receipt of credible information, the Directorate General of I&I-IR undertook a search to trace the trade.

Summonses were served on major traders of bitcoin for further investigation. As per a report published online, the trade volume of bitcoin in Pakistan increased 400 per cent during December 2016 alone.

Bitcoin is sometimes used as a tool for money laundering due to the decentralisation of peer-to-peer online transactions and their anonymity. No laws currently regulate the trade in bitcoin.

According to the tax official, the inquiry showed major traders of bitcoin are employed in a multinational telecommunication company in Islamabad. They also maintain bank accounts in a few other countries.

However, they were not reporting their business activities to the tax authorities, which gave rise to the suspicion of money laundering.

The tax official said there is a high chance of tax evasion and money laundering in the trade of cryptocurrency.

Therefore, an in-depth probe is being carried out to gauge the actual quantum of bitcoin trading and scrutinise whether its income is being properly reported under the tax laws.

Published in Dawn, May 25th, 2017