ESL Investments CEO Eddie Lampert has emerged victorious in the Sears Holding Corporation bankruptcy auction with a $5.2 billion bid that potentially saves tens of thousands of jobs and keeps 425 Sears stores open across the United States.

Sears Shares Leap after Lampert Wins Bankruptcy Auction

Earlier in January, CCN reported that Lampert was granted more time by a judge to up his rejected $4.4 billion bid to take over the ailing retailer. While the deal comes as a relief to the estimated 45,000 people whose jobs still remain technically at risk, it still needs to be ratified by a judge.

At the time, it was also reported that creditors preferred a liquidation to the prospect of Lampert taking over the iconic retailer, owing to several controversial decision made during Lampert’s tenure as CEO of Sears where he still holds the position of chairman.

Coming after weeks of negotiations and legal tussles, news of the deal sent the 126-year-old retailer’s share price up 68 percent to a 3-month high of $.084.

sears eddie lampert
Sears Holding Corporation Stock Price jumped 68 percent on news of Lampert’s successful bid | Source: TradingView

Bankruptcy Controversy Amid Amazon’s Prolonged Retail Disruption

According to sources quoted by ReutersLampert’s bid went through in the early hours of Wednesday after he put in additional cash and liabilities to improve the previous bid. The successful conclusion of the auction is only the first part of any prospective recovery for Sears, as the deal must be documented and is still subject to regulatory approval by a U.S. bankruptcy judge.

In addition, a group of creditors is still opposed to the deal, claiming that they stand to recover more from a total wind-down and from civil lawsuits against ESL Investments over controversial deals carried out with Sears – which Lampert insists were above board – during his tenure as CEO. His sole challenger during the auction process was Sears itself, whose concern was that Lampert’s previous bids would not cover the bills incurred by the retailer since it went into administration. The new bid is expected to fully cover these liabilities, which is a key requirement for bankruptcy protection.

The retailer’s woes tell a wider story of disruption and falling fortunes in the physical retail sector which has been devastated by the growth of Amazon and other online shopping platforms. Despite merging with Kmart in an $11 billion deal in 2005, Sears eventually succumbed to the same circumstances that have befallen a number of big-box retailers including Toys R Us Inc., J.C. Penney and Bon-Ton Stores Inc., among others.

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Investment management firm Invesco has suggested that opportunities exist in China despite the earnings warnings that U.S multinationals have issued in response to the ongoing trade war.

Speaking to CNBC, Invesco’s chief global market strategist, Kristina Hooper, stated that U.S. companies have “overly blamed China” for revenue declines:

There’s a lot of fear around China. We’ve certainly seen that rush that could be characterized as a panic, and I do think that presents some opportunity.

Falling Revenues? Just Blame the Trade War

According to Hooper, more U.S. firms are likely to blame the trade war between China and the U.S. for dismal revenues as the earnings season kicks in. Earlier this month, iPhone maker Apple revised its first-quarter guidance downwards citing reduced sales in China. While Apple had initially predicted sales revenues would range between $89 and $93 billion, the revision saw the figure reduced to $84 billion. Currently, China is Apple’s largest market outside the United States.

Apple Plunged 10% in Hours and the Firm Still Doesn’t Know the Root Issue 


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Apple Plunge 10% in Hours and the Firm Still Doesn’t Know the Root Issue

Apple is in deep trouble. With 8% drop in stock price on the day and low sales forecast in China, the technology behemoth is facing a tough quarter ahead.

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At the time, the company’s CEO Tim Cook stated that the trade tensions had triggered an economic slowdown in China beginning in the second half of 2018:

If you look at our results, our shortfall is over 100 percent from iPhone and it’s primarily in greater China. It’s clear that the economy began to slow there in the second half and I believe the trade tensions between the United States and China put additional pressure on their economy.

Other U.S. firms which have similarly issued earnings warnings include tire maker Goodyear and shipping company FedEx.

Deal in the Offing?

donald trump xi jinping trade war dow jones
President Donald Trump has suggested that the U.S. is close to striking a deal with China to end the trade war. | Source: AP Photo/Andy Wong, File

Part of the reason for Hooper’s optimism on China is the belief that trade negotiations will bear fruit:

What we’re hearing is that the president [Donald Trump] is actually eager to make a deal. It could be a deal on specifically China making some small concessions around buying some more U.S. products, and we could call it a day. That looks more and more like a possibility.

Additionally, Hooper expects the Chinese government to start an economic stimulus program this year that will rev up economic growth in the world’s second-largest economy.

While smaller firms may currently seem attractive to investors since they have less foreign exposure, Hooper has advised against ruling out multinationals. This is because their stock prices are already trading at a discount:

I wouldn’t walk away from U.S. companies that do have exposure to China. Some of them have already been hit. Prices have come down recently for a number of those names so that could represent an opportunity.

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The research team at BitMEX exchange has released a report in collaboration with TokenAnalyst which reveals that various ICO teams in 2018 gifted themselves a grand total of $24.2 billion worth of crypto tokens.

The abstract of the piece is quick to state that “in reality liquidity was too low for this value to be realized,” adding that the true value has fallen by now to $5 billion due to the crypto bear market, and $1.5 billion worth of transfers from team address clusters have gone through.

Arthur Hayes, the CEO of BitMEX, mocked crypto startups for reaping the fruits of creating “poo poo” tokens through ICOs. “Gravity is a b*tch,” he said.

Follow The Money

Arthur Hayes@CryptoHayes

When you create poo poo out of thin air, gravity is a bitch. Check out the latest report from BitMEX Research on ICOs.

BitMEX Research@BitMEXResearch

Tracking US$24 billion Of Tokens ICO Teams Gave Themselves

In collaboration with @thetokenanalyst, this report focuses on the treasury balances of the ICO tokens. Teams issued themselves US$24.2 billion of their own tokens, now worth around US$5 billion 

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The research is based on data for 108 tokens which, at the all-time high (ATH), were worth $80 billion in total, representing a $70 billion “loss” from the peak value, although again, it would have been impossible to sell for that much due to liquidity issues. The BitMEX research team acknowledges this in the piece but considers it a useful guideline because some trading did, in fact, occur at the ATH for these projects.

Of the $24 billion issued to ICO teams by themselves, 54% of the value was lost due to the price of the currency crashing. The teams currently hold an illiquid $5 billion in crypto tokens they issued to themselves and may have realized up to $1.5 billion in gains on top of that.

The researchers emphasize the caveat that the valuations for these holdings, while accurate in terms of the current trading price of each currency, may be overblown in the sense that the liquidity is not there to support selling the holdings at once or even at all. The data was gathered from studying smart contract information on the Ethereum blockchain.

The data is therefore a probabilistic estimate and is likely to be inaccurate at individual project level. However, the primary motivation for this report was to produce macro data about the team holdings of ICO tokens on Ethereum. Although this analysis has produced results which are far from perfect, we believe one can draw reasonable macro conclusions from the analysis.

The research then goes on to analyze each token’s value at ICO, post-ICO issuance, transfers away from team cluster, loss in value, and current value.

The End Result

ico crypto treasury
Source: BitMEX

The article concludes that ICO teams may have profited by $13 billion in total from ICOs, with very little effort made or value generated on their part.

Although, as we have repeatedly explained, there are many inaccuracies and assumptions involved in producing the data. Based on our methodology, it appears as if ICO teams have profited by almost US$13 billion from this ICO process. In our view, this money was made incredibly easily, with very little work, accountability or transparency. Therefore ICOs has proven an extremely attractive way for project founders to raise funds. The results for investors of course, have not been as attractive.

Billions were raised in the ICO process which burned countless investors over-eager to get in on the crazy throughout 2017 and much of 2018. While the trend had mostly died down as of Q3 last year, it’s too late to undo the damage done to retail investors’ pockets as well as the reputation of the cryptocurrency movement overall, both of which will need to be rebuilt slowly over time, and one can only hope that in the future, participants on both sides of the market will exercise more restraint when it comes to fundraising projects so as to avoid disaster.

As crypto-twitter novelty account @TheCryptoDemon jokingly put it earlier today:

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Crypto Demon@TheCryptoDemon






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Russian Prime Minister Dmitry Medvedev has addressed the cryptocurrency bear market in a speech at the Gaidar international scientific forum, according to local media outlet TASS.

Russian PM Warns Against Discounting Bitcoin

On Tuesday, Medvedev stressed the importance of carefully monitoring the situation of Bitcoin and other cryptocurrencies, citing their volatility as a cause for concern but stating that the technology had its benefits and should not be cast aside.

Speaking on the extreme volatility seen in 2018, the prime minister and former president said:

But this, of course, is not a reason to bury them [cryptocurrencies]. Here […] there are both light sides and dark sides, as in any social phenomenon, in any economic institute. And we should just watch closely what happens to them.

Medvedev went on to discuss trade protectionism, social inequalities, and the speed and scope of global digital transformation, saying that the situation with the cryptocurrency market was among these global challenges.

Russia Investing in Crypto? #FakeNews

The statements come directly after a rumor of major Russian investment in Bitcoin went viral throughout the cryptocurrency news space recently, with numerous media outlets parroting the story that Russia would be purchasing $10 billion worth of Bitcoin. CCN reported that the story was likely fake news. The story originated from a tweet made by a Russian economist on Twitter and had been exaggerated in the media.

Chris Burniske


Replying to @cburniske

5/ Take global asset values:

Gold: $7.7T
Stock Markets: $73T
Broad-Money: $90T
Debt: $215T
Real Estate: $217T
Derivatives (low-end): $544T

Placing the world over $1 quadrillion in value, where monies most broadly defined represent < 10% of that value. 

All of the World’s Money and Markets in One Visualization

How much money exists in the world? This updated visualization compares the world’s richest people, companies, and markets with the world’s money supply.

Vladislav Ginko@martik

Chris, I believe sitting here in Moscow, Russia, that the real factor of Bitcoin apotion will be when Russian government I’m working for will start investing almost $470 billion reserves into Bitcoins. I expect that it’ll be at least $10 billion in the first quarter of this year.


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Russian Presidential Academy of National Economy and Public Administration economist Vladislav Ginko recently stated that he believes Russia may use Bitcoin to hedge against sanctions, and his opinion was adopted as gospel by crypto media outlets, possibly as an effort to pump the price of Bitcoin or perhaps simply due to bad reporting. While it’s possible that Russia will at some point use Bitcoin as a hedge, there has been no official government statement to back that up.

Russia to Regulate Crypto

Russia is reportedly preparing a bill to outline cryptocurrency regulations over the course of the next two months, according to TASS. The State Duma (lower house of Russian Parliament) will be drafting a January/February bill to regulate ICOs and cryptocurrency crowdfunding among other aspects of digital asset trading and management.

The head of the State Duma Committee on the Financial Market, Anatoly Aksakov, stated on January 14:

The long-awaited law on digital financial assets is in the GPU for approval […]

It is in conjunction with two others: the law on the regulation of investment platforms or crowdfunding and changes to the Civil Code. We agreed that the law on digital financial assets should be adopted along with these two legislative acts […] Judging by the information that I have, this is January-February. Most likely, February, of course. Consideration of all three bills should pass.

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In the past 24 hours, the crypto market has recovered from $120 to $123 billion as the Bitcoin price avoided a further drop below the $3,600 mark.

bitcoin price
The bitcoin price avoided a further drop below $3,600.

Ethereum has also been able to rebound relatively quickly from the delay of the Constantinople hard fork, which initially caused a 10 percent drop from $130 to $116.

Slow Grind Up For Bitcoin Expected in 2019

Due to the intensity of previous sell-offs, there exists a strong possibility that the price of BTC and other crypto assets drop below key support levels in the short term.

Some analysts see the dominant cryptocurrency declining to its 12-month low at $3,122 in the last phase of the year-long bear market before recovering by the year’s end.

Eric Thies, a cryptocurrency technical analyst, said that similar to the price movement of Bitcoin in 2015, the asset may initiate a strong upward movement by the end of 2019.

“Similar to 2015, 2019 may be the year of accumulation,” he said, even if the asset demonstrates wild volatility in the low range of $2,000 to $4,000 in the weeks to come.

However, in the upcoming months, a cryptocurrency researcher Willy Woo, best known for his work at, said that the on-chain volume of Bitcoin remains relatively low to suggest the establishment of a proper bottom.

Woo explained that while the steep drop of Bitcoin from $6,000 to $3,122 led to an increase in volume, it did not show any sign the initiation of an accumulation period.

He stated:

Despite the technical setup that suggests bullishness is possible, there’s not a lot on-chain volume to fuel a prolonged up move. What we saw in the last 7 weeks was a spike of on-chain volume driven by volatility, coins moving to exchanges to trade. The initial volume spike false signalled a faster detox and an earlier end to the bear market, but in fact it was a volatility side effect. That move from $6k to $3k created immense trade volume, but it was in no way a signal that accumulation volume had begun.

It may take Bitcoin and other major crypto assets well over several months to begin showing evidence of accumulation in the cryptocurrency exchange market and on over-the-counter (OTC) trading platforms.

Until then, most analysts expect a high level of volatility in a low price range, which may lead BTC to revisit its yearly low.

What Will Happen to Small Tokens

As BitMEX CEO Arthur Hayes suggested, tokens and small blockchain networks with weak fundamentals and user bases are likely to struggle throughout 2019.

Especially if Bitcoin endures another correction prior to establishing a bottom, perhaps by the end of the second quarter of 2019, illiquid and low market cap crypto assets could experience a free fall without sell pressure, resulting in large losses against both Bitcoin and the U.S. dollar.

Credit: CCN

United Airlines CEO Oscar Munoz says the partial US government shutdown has not had a significant financial impact yet, but warns that this could change dramatically if the furlough drags on much longer.

“There is some impact there,” Munoz told CNBC Wednesday (Jan. 16). “It’s not discernible and it’s not significant. Clearly the longer this goes, of course there’s going to be impact. And we do worry about that.”

Munoz made the remarks a day after the CEO of Delta Air Lines said it expects to lose $25 million in revenue for January due to the shutdown.

So far, Oscar Munoz says he’s unable to predict the exact economic impact the shutdown will have because he doesn’t know how much longer it will last.

UAL Stock is Flying High

However, the shutdown has not hurt the United Airlines (UAL) stock price so far.

Shares of United Continental Holdings ― the parent company of United Airlines ― closed Wednesday at $86.36, up 6.3%, on heavy volume of 10.8 million shares. Average daily trading volume is 4 million shares.

UAL shares have been inching up for the past five trading sessions amid a mild overall stock market rally. The Dow Jones Industrial Average closed today at 24,207 ― up 141 points.

united airlines stock
United Continental Holdings shares saw a noticeable bump on Wednesday.

21st US Govt Shutdown is Now the Longest

The aviation industry has been particularly hard-hit by the government shutdown. Some 51,000 employees of the Transportation Security Administration are working without pay amid the ongoing impasse between Congress and US President Donald Trump.

The shutdown started on Dec. 22, 2018, and is now in its fourth week. This is the 21st shutdown the US government has undergone over the years and is now the longest.

Trump has asked the Democrat-led House of Representatives for $5 billion to build a wall along the US-Mexico border. The Democrats responded by calling the wall “immoral” and saying they won’t offer any money for it.

Both sides have accused the other of acting in bad faith. As recently as 2015, Democrats favored immigration reform and a border fence, but that all apparently changed once Donald Trump took office. The Republicans, meanwhile, failed to pass border wall funding during two years of unified government.

Canadian Air Workers Send Pizza to US Peers

Even in the midst of a slowdown, aviation workers showed that their sense of humor remains intact.

As CCN reported, Canadian air traffic control workers sent pizzas to their US counterparts last week as a gesture of goodwill and support.

“It’s nice to see that there’s solidarity out there,” said former air traffic controller David Lombardo.


That’s how we roll: Cheesy Surprise: Canadian Air Traffic Controllers Send Pizza to US Peers Amid Shutdown 


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Cheesy Surprise: Canadian Air Traffic Controllers Send Pizza to US Peers Amid Shutdown

Canadian air traffic controllers showed support for their American counterparts who are working during the US government shutdown by sending them pizza

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Meanwhile, JPMorgan CEO Jamie Dimon suggested that the shutdown could cut the United States’ economic growth to zero if it continues through March 31.

“Someone estimated that if it goes on for the whole quarter, it can reduce growth to zero,” Dimon told reporters. He did not cite who the source for the claim was.

Despite the government turmoil, Dimon remains bullish about the US and global economy. The billionaire banker insists that there is no recession ahead, and urged everyone to “take a deep breath.”

Credit: CCN

China’s economy is facing some of its toughest challenges in years. On Wednesday, a day after several Chinese government institutions vowed further stimulus to aid its financial sector, the People’s Bank Of China injected a net $83 billion (560 billion yuan) into open market operations via reverse repo operations — to counter its declining economy.

In an official statement, China’s central bank states:

At present, it is the peak of the tax period, and the banking system’s overall liquidity is falling rapidly.

Unfortunately, the injection has failed to impact the Chinese stocks and money market rates as they closed on Wednesday with little to no change.

China Must Prepare for Economic Difficulties?

While injections are not unusual for this time of the year, this one is significantly heftier than the typical ones and comes after an announced large cut in banks’ reserve ratios. The reduction is expected to free up a total of $116 billion for new bank lending. Chinese authorities have reportedly urged financial institutions to keep supporting struggling firms and even dangled incentives, while banks are concerned over delinquencies after a long regulatory crackdown on risky lending.

“The news is clear—the economy needs help,” Trinh Nguyen, a Natixis economist, told Reuters.

Moreover, according to the same news outlet, a state radio on Wednesday quoted the country’s Premier, Li Keqiang, saying that China must prepare for economic difficulties in 2019 as its financial sector faces increasing pressure.

According to another publication in South China Morning Post, eight of the 12 provinces in China that have reported growth targets for 2019 have updated them downwards. All targets are either the same or lesser than the ones for 2018:

Provincial growth targets in 2019 and 2018
Provincial Growth Targets for 2018 and 2019 | Source: South China Morning Post

These moves, coming days after the Chinese government released its latest trade data that nearly shocked analysts with an unexpected December drop in exports and imports, paint a clear picture of the dire situation the economy is in.

Better Times Ahead?

Property prices in China remained resilient in December while the construction sector also appears to be slowly picking up due to fast-track approvals of additional infrastructure projects.

Moreover, on Tuesday, several Chinese government institutions pledge new stimulus to support its slowing economic growth while promising that it won’t resort to “flood-like” incentives again. These stimuli result in a rapid increase in growth rates while leaving a mountain of debt behind.

According to Ken Cheung, a senior Asian FX strategist at Mizuho in Hong Kong, “while the (PBOC’s) net injection is big, it’s little versus what a rate cut would release, which is what people in the market are watching for.”

As the US-China trade war continues fueling uncertainty with full force, it is unclear whether the world’s second-largest economy will be able to take control over its rapidly declining economic growth.

Major Global Economies Struggle

The year has seen a rocky start for several other economies. Take Germany for example, whose financial sector, the fourth largest in the world, has also been experiencing a decline for the past 12 months after nine years of consecutive growth.

Besides shrinking car sales and exports to China, Germany’s biggest bank — Deutsche Bank — has also been under scrutiny for corruption and money laundering. Last November, 170 law enforcement officials raided the bank’s headquarters in Frankfurt to look for information regarding the exposed Panama Papers.

Moreover, on Jan 2nd, the European Central Bank took control over Italy’s Carige bank. The event occurred following the resignation of the majority of the bank’s board members. In the statement, the ECB notes that the “temporary administrators are tasked with safeguarding the stability of a bank by closely monitoring its situation.” Amid a struggling Italian economy, the event has raised concerns for another banking collapse in the country.

The US government is experiencing its most extended shutdown period while J. P. Morgan Chase faces the risk of a potential class-action lawsuit due to manipulation of precious metals markets.

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David Rosenberg@EconguyRosie

The NY Fed recently updated its recession-risk model – up to 21.4% in December, from 15.8% in November and 14.1% in October. The odds have doubled in the past year and haven’t been this high since August 2008.


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To top it all off, the NY fed has recently updated its recession-risk model, and it doesn’t look as good as one might think. The number has grown to 21.4% in December, from 15.8% in November, and 14.1% in October.

Whether the global economy will keep thriving under its current and upcoming hardships or cryptocurrencies will come to the rescue, as touted, remains to be seen.

Credit: CCN

Automotive giant Ford has entered a partnership with IBM, Huayou Cobalt, and LG Chem to build a blockchain platform to monitor the supply of cobalt from the Democratic Republic of Congo as part of an attempt to ensure that child labor does not make up any part of its supply chain.

Ford & IBM Partner to Monitor Cobalt Mines

Announced on Wednesday, the project, which will be managed by the global responsible-sourcing consultant RCS Group, will use IBM’s proprietary blockchain platform to monitor cobalt supplies used in the production of lithium-ion batteries.

The move comes at a time when other primary production industries are also exploring blockchain technology as a potential solution for effective supply chain tracking to ensure that minerals sourced from conflict zones or using child labor in poor countries such as the DRC do not enter the global market. In October, CCN reported that Alrosa, the world’s second largest diamond mining company joined Tracr, a blockchain-based supply chain monitoring system developed by diamond mining giant De Beers Group.

Like the Ford project, Tracr was developed to ensure that diamonds entering the global market from poor West and Central African countries are not sourced from conflict zones, which indirectly prolongs armed conflicts by funding local warlords. Like rare-earth metal mining, diamond mining in some parts of Africa also has a problem with child labor which is being tackled with the deployment of blockchain implementation alongside IoT tracking.

Challenges Involved in Tracking Metals

cobalt ford blockchain
Carmakers view electric vehicles as a positive tool for the social good, so Ford wants to make sure its vehicles aren’t using materials that were mined unethically. | Source: Shutterstock

Unlike diamonds, which move as individual pieces from mine to market, metals present an altogether different challenge for the monitoring project because they are often smelted together, at which point it becomes nigh on impossible to identify what came from where. To deal with this challenge, IBM says it is looking into the possibility of AI-aided chemical analysis to identify the geographical origin of cobalt so as to ensure that “clean” cobalt is not smelted with “dirty.”

The challenge of sanitizing the cobalt supply chain is particularly important because lithium-ion batteries are set to achieve an even higher level of demand as the world increasingly looks toward electric vehicles in addition to the vast number of everyday electronic devices which are dependent on lithium-ion cells.

According to RCS, the challenge posed by artisanal miners – unregistered local panhandlers – will be dealt with by bringing them into a blockchain network of validated participants so that it is possible to get a picture of who is mining what and where cobalt supplies are coming from.

Speaking to ReutersIBM General Manager, Global Industrial Products, Manish Chawla said:

There is no fool-proof method, but you have to keep the ball moving forward, to keep raising the level of accuracy.

Credit: CCN

Binance has frozen some of the funds that were stolen from crypto exchange Cryptopia during the high-profile hack that occurred earlier this week.

Binance Puzzled Why Hackers Keep Sending Funds to its Exchange

Binance CEO Changpeng Zhao announced the news in an early morning tweet on Wednesday.

CZ Binance


Just checked, we were able to freeze some of the funds. I don’t understand why the hackers keep sending to Binance. Social media will be pretty fast to report it, and we will freeze it. It’s a high risk maneuver for them.

🐒🐵I Dream Of Alts🐵🐒@ShaftedTangu

Hey @cz_binance Binance has stolen tokens from Topia hitting it sir. Can you lock it down? 


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Zhao questions why attackers keep on sending the stolen funds to Binance, given that word quickly spreads and the crypto exchange is not shy about halting the flow of stolen funds.

Cryptopia said in a tweet that the breach occurred on Monday. Based in New Zealand, Cryptopia said the hack caused it to suffer “significant losses.”

The breach moved at least $2.4 million worth of ethereum (ETH) to several unknown wallets. Also, it moved roughly$1.2 million worth of Centrality (CENNZ).

Still, it’s unclear who was behind the hack that resulted in the redistribution of the stolen funds through Binance and other exchanges. Some have even suggested that Cryptopia may have made the transfers for security reasons.

Cryptopia said Tuesday in a tweet:

Cryptopia Exchange@Cryptopia_NZ

We cannot comment as this matter is now in the hands of the appropriate authorities. We will update you as soon as we can. 


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Investigation involving crypto-currency company

Police were advised late yesterday of an issue involving potential un-authorised transaction activity at the Christchurch based crypto-currency trading company Cryptopia.

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Zhao Creates His Own Debacle

The day after Cryptopia announced the hack, Zhao posted a message on Twitter that received considerable backlash. In that tweet, he appeared to advise crypto holders to store their holdings on exchanges instead of on personal storage devices like USB drives or hardware wallets.

That tweet did not sit well with some. Some took Zhao’s tweet to mean that the risk of self-storage is significantly greater than the risk of storing cryptocurrency on “reputable” exchanges like Binance, for example. However, Zhao later said he was not necessarily advising investors to store funds on exchanges.

Are Hacks Becoming the Norm?

CCN recently pointed out that more than $731 million was lost to exchange hacks in the first half of 2018 alone. Most of that loss, $500 million, resulted from the Coincheck hack of January 2018. There have not been any more exchange hacks on the scale of the 2014 Mt Gox hack of that upended the crypto space.

Still, breaches are a serious risk to the long-term stability and adoption of cryptocurrency. Continued breaches with basic hacking tools and methods could erode trust and confidence from investors in the public market.

Credit: CCN

Increasing rates of Chinese capital outflows over the past few months are presenting the cryptocurrency space with an unprecedented opportunity as citizens of one of the world’s most strictly regulated jurisdictions find ever more ingenious ways to get around financial movement restrictions.

China’s Capital Restriction Problem

In theory, China has perhaps the most stringent capital restrictions of any major world economy. Regulations state that individuals are not allowed to move more than $50,000 out of the country and companies are only allowed to exchange yuan for other currencies with approval from authorities. This is a rule that dates back to the era when Chinese industrialization was being developed under the principle of national self-reliance and conservation of scarce foreign reserves. These days, critics claim that such capital restrictions serve no purpose other than to coerce wealthy Chinese nationals to toe the communist party line under threat of losing their assets forcibly domiciled in the country.

In practice, even the Chinese government has a limit to how effectively or extensively it can enforce such regulations. Over the past 10  years, a vast number of Chinese elites have found ways to move their money abroad, with their extensive real estate holdings even becoming a subject of political controversy in Vancouver and London due to perceived inflationary pressure on local housing markets. This is not to mention a significant number of well-funded Swiss bank accounts held by Chinese nationals.

Opportunity For Crypto

While the central government with its tremendous surveillance capacity is not unaware of the various creative ways Chinese nationals use to export capital beyond the $50,000 limit, it is only likely to carry out a thorough crackdown in the highly unlikely event that foreign reserves become depleted. With over $1 trillion in American bonds on its books, such a scenario is extremely remote, and this creates a juicy opening for cryptocurrencies.

Chinese trade data from last month shows that capital outflows increased significantly. The last time a surge of this level happened, bitcoin embarked on a prolonged bull run starting from $200 and eventually culminating at its $20,000 all-time high as Chinese traders and exporters used cryptocurrency to move large amounts of money out of the country.

Going by last month’s trade data as well as the current rise of the Yuan, it is likely that over the next few months, Chinese money will make its way into crypto, which may herald the start of another Bitcoin bull run.

Credit: CCN