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Cryptocurrency scams, fees, outages and weirdness heating up with markets

Posted: 14 February 2020 5:55 pm
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Hackers hack, hacks huck, outrageous exchange outages outrage exchangers.

The total cryptocurrency market cap, as flawed a metric as it is, has approximately doubled between the start of the year and now, while Bitcoin prices have risen about 45% in the same period. As tends to happen when they get fired up, the general level of weirdness in them also increases.

It's happening, depending on what "it" refers to

You know sentiment is running high whenever Fundstrat analyst and perma-bull Tom Lee hits CNBC with predictions of a major Bitcoin price rise. This time it will apparently be going to $40,000 by August 2020.

Of course, it's easier if the exchanges are cooperating. Right now Binance and BitMEX, two of the world's most popular exchanges, are both experiencing their own issues.

BitMEX's order books may or may not be possessed by some kind of demon or other angsty spirit, with some users mentioning that they weren't liquidated when they apparently should have been. Others are saying their margin was taken out back and shot, for no clear reason.

Understandably, one of these groups is much angrier about the whole thing than the other. Observers are more philosophical.

Binance is experiencing its own issues in the form of a laggy order book. Following user complaints, Binance CEO Changpeng "CZ" Zhao tweeted out a positive spin, noting that although "parts of the system are still struggling to keep up with all the high traffic," "the good news is there is very high sustained demand."

Others took to social media to ask how they would be compensated for the trades they never made as a result of those issues. It's not immediately clear if there's any actual difference between requesting compensation for nonexistent trades and just asking for free money.

Speaking of just asking for free money, crypto scams appear to be heating up again, as they tend to whenever prices rise.

Elon Musk, who is best known for not giving away free money, even when you send him some first, recently tweeted that "the crypto scam level on Twitter is reaching new levels."

"This is not cool," he added.

Elsewhere on Twitter, Anthony Pompliano put the promotion machine into overdrive and reiterated predictions of Bitcoin at $100,000, which may have prompted Twitter to send his account to time-out for an hour, just to cool off.

"De-platforming is a scary thing we all have to deal with," he said upon his return.

Indeed, there is nothing scarier than having a small audience rather than a large audience in a perceived bull market. Crypto malware operators know that lesson better than most, and they've also been building up their own "audiences" lately.

Monero malware group Outlaw has returned to the scene with new and improved crypto-jacking malware, after being quiet for the better part of a year, while North Korea has stepped up its own XMR mining efforts in a big way.

"We have observed an at least tenfold increase in Monero mining activity from North Korean IP ranges since May 2019," said Recorded Future this week.

Bullish. If that doesn't qualify as institutional investment in cryptocurrency, nothing does.

Considerably less-bullish is today's IOTA Trinity wallet hack. It's believed that more than a million dollars worth of IOTA was somehow stolen from the official IOTA Trinity wallet, with about 10 identified victims so far.

IOTA froze cryptocurrency transactions on its network by switching off the coordinator while it investigates. Currently, it's thought that this could be something to do with dependencies in older versions of the wallet, third party plugins or something else.

As is usual in these times, some, but not all, exchanges have come together to confirm that they will be freezing stolen funds given the opportunity. Of course, given how well exchange systems are working right now, that probably shouldn't be considered a binding promise.

However, the weirdest thing that happened today may be that the Bitcoin network is actually still working alright. The mempool is getting periodically filled then mostly drained, just as Satoshi either intended, or never intended, depending on who you ask.

Yesterday was a bumper day for the Bitcoin network though, with average fees climbing above US$1 for the first time this year. The growing Lightning Network capacity over the last 24 hours may have something to do with this.

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Of course, it's easier to bust out big numbers off a small base. The Lightning Network isn't much closer to usability than it was last time Bitcoin went for a jog. The most recent development on the LN front is that Lightning Labs has raised $10 million in series A funding – more than the network's total current capacity – and that it's released a new tool called Loop for improving user experience.

Apparently the only reason people aren't locking up liquidity in the Lightning Network is because it's not easy enough.

Time will tell whether positive crypto sentiment or Bitcoin bandwidth runs out first.

Depending on when you read this, and depending on what happens next, it's possible that one of the two already has.



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Disclosure: The author holds BNB, BTC at the time of writing.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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