US Congressman expresses importance of crypto wallet privacy

Cynthia Lummis and Warren Davidson speak on Bitcoin’s importance and personal privacy during an interview at Bitcoin 2021 in Miami.

At the bustling Bitcoin 2021 conference in Miami, Congressman Warren Davidson, alongside United States Senator Cynthia Lummis, sat down to field interview questions. The interview took a turn toward privacy, with Davidson responding with comments on crypto wallets. 

“At the end of the year, if you think about it, Secretary Mnuchin was talking about banning private wallets,” Davidson said, responding to a question about the possibility of over-regulation in crypto. “That’s a horrible approach,” he added. “If we don’t protect private wallets, someone is going to try to ban them.”

As Davidson mentioned, December 2020 saw the U.S. Treasury suggest strict overwatch on self-custodied digital asset wallets, with certain specifics, such as calling for more information from users transacting with wallets held away from crypto exchanges.

“I wish the country would take the threat to privacy as seriously as they take the threat to the second amendment,” he said. The second amendment of the U.S. Constitution gives citizens gun ownership rights.

Taking her turn at a response, Lummis noted the importance of teaching U.S. government folks on Bitcoin. “We’re trying to create a financial innovation caucus so we can use it to educate members of the U.S. Senate and their staffs about Bitcoin, its advantages, and why it is just such a fabulous asset to dovetail with the U.S. dollar,” she said. “It can be the underlying network, worldwide, to keep the dollar the global reserve currency, but still allow people to transact in a very freedom-loving way,” she said, adding:

“Whether you’re in Venezuela, where the inflation is outrageous and you’re trying to get your wealth out of the country, you can get it out through Bitcoin. And, the United States, if we get to the point where we’re experiencing the kind of inflation we’ve begun to see this year, we may want that alternative as well.”

In recent years, Venezuela has seen soaring levels of inflation amid a broad economic decline that was partially tied to the oil-price collapse of 2014.

The Bitcoin 2021 conference in Miami thus far has hosted significant action in terms of speakers and discussions. The event will continue for a second day on Saturday. 

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The US Government Just Unwittingly Made The Biggest PR Move For Bitcoin

Newly passed $1.9 trillion U.S stimulus bill could finally send Bitcoin to $50,000

Bitcoin at $100,000 is a price prognosticated by pundits, courtesy of the fundamental factors that signaled the bullish rally. However, Bitcoin is receiving an external push from the same organization that steadily criticizes its credibility. The United States government in its usual fashion is helping the benchmark asset live up to analysts’ expectations with the […]

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Congress is blaming Robinhood, not Reddit

We didn’t learn much new in today’s hearing, but the spotlight was definitely on the gamified trading app, rather than the traders on r/WallStreetBets.

Vlad Tenev, Robinhood’s CEO, very much occupied the hot seat in today’s hearing before the House Financial Services Committee over January’s market volatility. 

None of the representatives seemed particularly interested in putting the screws to Reddit CEO Steve Huffman, and many seemed to give Keith Gill the same props the rest of us did.

These aren’t the market manipulators you are looking for

Gill, in all fairness, was the most likeable character involved, introducing his remarks by saying “A few things I am not: I am not a cat and I am not an accredited investor.” Gill, who really started this chain of events by posting about his investment into GameStop in June 2019, even doubled down on his opinion that GME remains a good buy today, at current prices. This is despite the fact that wild GME trading has attracted criminal investigation.

That lack of scrutiny towards Gill and Huffman does much to quell widespread fear that the events surrounding explosive trading in GameStop (GME) shares at the end of January would kick off probes into social media platforms’ role in potential market manipulation.

This is even as the House Antitrust Subcommittee announced today more hearings to scrutinize the biggest players in social media. Reddit, for now, seems to have flown under the radar.

Congressman Warren Davidson, who sits on the committee, noted this rare area of consensus, telling Cointelegraph: “I was hopeful right out of the gate because early on in the news cycle AOC was sticking up for the Reddit users, saying these people should have a right to trade. And then Ted Cruz, on the other end of the political spectrum said, ‘well, we agree.’”

Tenev’s business model

Though broadly, Republicans were more lenient than Democrats in addressing Robinhood’s activity, and especially the firm’s controversial shut-off of buying but not selling of GME and other high-volatility stocks, everybody wanted answers from Tenev.

The nature of Robinhood’s revenue model, which is based on the sale of order flow, while advertising itself as commission-free, fell under mass scrutiny, as did it’s dependence on a $3 billion injection of capital to meet collateral requirements.

“I believe a vulnerability was clearly exposed in your business model,” said Congressman Anthony Gonzales while questioning Tenev. “We just can’t live in a world where my constituents can have their shares liquidated if you can’t make a capital call.”

Many called out Robinhood’s claims to be busy democratizing finance. Tenev consistently pushed the figure of $35 billion as Robinhood users’ total gains, which Rep. Jim Himes said “you and anybody else schooled in finance know is meaningless without a rate-of-return.”

But while today’s hearing revealed a lot of hostility towards Tenev, it wasn’t all that educational.

Despite Chairwoman Maxine Waters’ admonition that “This is not political theater at all,” there didn’t seem to be any concerted sense of solutions to the epic trading that fueled GameStop’s (GME) meteoric rise at the end of January.

Real-time solution?

Some proposals, including from Tenev himself, as well as Davidson, were that the situation would not have developed at all if the U.S. had trading that settled the day of, rather than two days later — termed T-0 rather than T-2. Tenev noted “The existing 2-day period to settle trades exposes investors and the system to risk.”

Kenneth Griffin, CEO of Citadel, which he described as “the largest market maker in the world,” disputed the likelihood of a real-time system for securities trading in the next several years, saying: “The issue is everything has to work perfectly.” Real-time trading, he said, “requires that every bit of the workflow is perfectly synchronized across the parties.” Davidson disagreed, saying “Clearly in your business the technology exists for trading firms that are engaged in high-frequency trading.”

Davidson noted the potential role of blockchain. The potential of security tokens to solve issues with intermediaries and brokers has been one of the long-promised benefits of blockchain, though that is changing.

Today’s hearing was just the beginning, Chairwoman Waters affirmed. She said the committee aimed to hold two more with different witnesses.

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Darknet market link provider claims its Bitcoin donors’ accounts were frozen

The admin of a well-known darknet market link provider claims its donation address was flagged as suspicious after it criticized Chainalysis’ KYT flagging system.

The administrator of dark.fail, a website providing verified links to darknet markets, claims that exchanges are unfairly closing accounts donating Bitcoin to the service after implementing a Chainalysis transaction flagging system.

The admin alleged in a tweet that two donors of Bitcoin to the website had their accounts blocked by exchanges that recently implemented Chainalysis’ new KYT — or Know Your Transaction — blockchain monitoring service.

The admin believes there is a connection between the account closures and its staunch and vocal criticism of Chainalysis, however the accounts may simply have been flagged automatically due to links to the darknet. While the site can be viewed as a gateway to the darknet, dark.fail’s Twitter bio classifies the account as an: “Anonymous journalist researching Tor: the uncensored internet.”

Dark.fail is a long standing critic of Chainalysis KYT flagging accounts as suspicious with no avenue for appeal. In Jan. 2020, the admin accused the blockchain analytics company of enabling the “theft” of customer funds that had been marked as suspicious by hidden KYT processes.

One of dark.fail’s BTC donation addresses, listed on the website home page recently as Dec. 2, 2020, contains nearly 40 transactions. The BTC donation option has since been removed from the website, which now only accepts contributions in the form of privacy coin Monero.

Chainalysis describes KYT as “an automated, real-time cryptocurrency transaction monitoring and compliance solution” which is used to detect patterns indicating “risky activity.” It is currently used by over 150 companies in 40 different countries. Chainalysis has also assisted government-led investigations in the past, helping to break up a notorious ransomware network last month.

While dark.fail’s status as an “anonymous journalist” is debatable, the report comes amid an atmosphere where journalist practices can be labeled as criminal activities. On Monday, a letter signed by the ACLU and other civil right defense groups called for the U.S. Department of Justice to drop charges against WikiLeaks founder Julian Assange, likening his indictment to “a grave threat to press freedom.”

In May 2019, one of the oldest websites about darknet related subjects, DeepDotWeb, was seized by law enforcement after its administrators were arrested on money laundering conspiracy charges. The two admins are suspected of taking millions in cryptocurrency kickbacks from darknet markets listed on their website.

According to stats provided by alexa.com, dark.fail is one of the most popular darknet market link providers on the internet, ranked #52,345 globally in terms of website traffic.

Cointelegraph has contacted Chainalysis for comment and will update this story with their response.

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Bitcoin-touting Senator Lummis appointed to Banking Committee

In announcement the appointment, Lummis made clear that she hopes to get digital asset legislation moving.

The most vocally pro-crypto Senator in the U.S. will join the committee responsible for the nation’s financial regulation.

On Wednesday night, Senator Lummis’ team told Cointelegraph that Lummis had received her committee assignments for the 117th congress.

The freshman republican from Wyoming will take her place at three committees: banking, environment, and commerce. The Banking Committee is the Senate’s front line for financial legislation and has hosted hearings with Facebook’s leadership over the Libra stablecoin, as well as, more recently, prospects for a digital dollar.

In a press announcement, Lummis noted her intention of using the appointment to the banking committee to advance digital asset legislation.

“Wyoming has been leading the way on financial innovation over the last several years. Through my role on the Banking Committee, I hope to shine a light on many of these pioneering efforts and work with federal regulators to ensure that regulation of digital assets are structured to encourage innovation, instead of stifling it.”

Lummis, who joined the Senate as of last month, is vocally pro-crypto. In a recent appearance on Anthony Pompliano’s podcast, she expressed her intention to launch a Financial Innovation Caucus. 

While the House of Representatives, especially the Financial Services Committee, has long featured many members interested in cryptocurrencies and even a Blockchain Caucus, Lummis is the first Senator to be so publicly engaged in the industry.

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