Florida State Employee Arrested for Mining Cryptocurrency on Agency Infrastructure
According to a statement released by the Florida Department of Law Enforcement (FDLE), an employee at the Department of Citrus was found using state-owned computing hardware to mine cryptocurrencies. The perpetrator, Matthew McDemott, served as the information technology manager for the department, which overlooks the functioning of the citrus industry in Florida.
The FDLE arrested McDermott shortly after the discovery and had him transported to Polk County jail. The cryptocurrency mining operation was discovered after an evaluation of the department’s utility bill amounts. According to the department’s inspector general, the months between October 2017 and January 2018 saw a jump of $825 in electricity costs.
Mining refers to the act of verifying of transactions within a cryptocurrency’s network. The FDLE also attempted to explain McDermott’s motives, stating,
“A mining pool, or team, is used to solve mathematical equations in an effort to mine the virtual currency and win a reward. The pool combines its resources to help offset costs.”
Government owned computational resources have actually been the target of clandestine cryptocurrency mining operations for a very long time now. Given that computers in some state-owned facilities are quite powerful because of the workload they need to handle, individuals are often tempted to use them for self gain. Just a few days ago, for instance, the Louisiana Attorney General sacked several IT employees after they were found guilty of using government computers to mine bitcoin.
In February 2018, a BBC report also revealed that hackers had successfully injected a cryptocurrency mining script into the Information Commissioner’s Office website. The hijacked website would use the processing power of a visitor’s computer to mine cryptocurrencies without the knowledge of the user.
The United States is not alone in its battle against unauthorized use of its computers for cryptocurrency mining. According to another BBC report, several Russian nuclear scientists were arrested following the discovery of their plot to mine bitcoin at a top-secret nuclear warhead facility in Sarov, Russia.
In most cases, the penalty for using government resources for personal gain is not very severe at all. However, in this instance, Matthew McDermott also used a state purchasing card to obtain additional mining hardware worth $22,000. The money was reportedly used between July and December 2017 to purchase 24 graphic processing units according to the Florida law enforcement agency. Because of the extended nature of his crime, McDermott has been charged with grand theft on top of official misconduct and had his bail set at $5,000.
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Bitcoin Slips to $7,840 as Sell Volumes Intensify, Cryptocurrency Market Slumps
The valuation of the cryptocurrency market, which hovered near the $470 billion mark merely two weeks ago, has declined to $313 billion, as major cryptocurrencies including bitcoin fell in value.
Bitcoin Slumps
Over the past 24 hours, the price of bitcoin fell from $8,600 to $7,840, by nearly $800. While trading volumes of most major cryptocurrencies across leading exchanges remain low overall, bitcoin’s daily trading volume has been relatively low, with sell volumes intensifying on exchanges like Bitfinex and Bithumb.
Yesterday, on March 16, CCN reported that although many analysts within the cryptocurrency sector and traditional finance industry unanimously agree on an optimistic long-term price trend for the cryptocurrency sector, the majority are skeptical towards the short-term momentum of bitcoin, given the 70 percent correction it has suffered since January.
After dipping below the $6,000 mark and falling from $19,666 to $5,920 by recording a 70 percent drop in value, the most dominant cryptocurrency in the global market has rebounded to the $7,000 region, and briefly achieved $11,600 last week.
But, as demonstrated by a cryptocurrency analyst better known as Wolf of Crypto below, it is important to acknowledge that bitcoin has suffered the third worst crash in its history, behind the 83 percent crash from $259 to $43 in April 2013, and the 87 percent crash from $1,163 to $152 throughout late 2013 and 2014.
Some people are visual learners! Cheers pic.twitter.com/znaGdYi6h2
— WolfofCrypto (
But, as demonstrated by a cryptocurrency analyst better known as Wolf of Crypto below, it is important to acknowledge that bitcoin has suffered the third worst crash in its history, behind the 83 percent crash from $259 to $43 in April 2013, and the 87 percent crash from $1,163 to $152 throughout late 2013 and 2014.
If speculators and investors expect 10 to 100-fold returns, it is only logical to also expect 50 to 80 percent decline in value, given that volatility exists going up and down. Moreover, the cryptocurrency market is still at its early stage; not enough retailers have adopted cryptocurrencies as a payment method and not enough projects have shown commercial success to demonstrate their potential to revolutionize trillion-dollar industries.
It is difficult for any major cryptocurrency to recover from its recent 70 percent correction because this time, investors in the mainstream and public markets have been damaged by the decline in the price of cryptocurrencies. Previously, cryptocurrencies were considered as an up-and-coming asset class with the potential to be worth many trillions of dollars in the future.
Now, a small portion of investors that experienced significant losses in the latest correction see the market as a bubble and as a failed opportunity, despite the optimistic comments of some of the finance and technology industries’ largest names, including Peter Thiel and Alan Howard.
The mainstream media is contributing to the continuous decline in the value of bitcoin, by offering predictions that can be considered absurd, given the lack of basis for them. For instance, a recent coverage by Bloomberg claimed the price of bitcoin will likely fall to $2,800, without providing evidence or indication of some sort.
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Traditional Liechtenstein Bank Launches Cryptocurrency Investment Platform
Citizens of Liechtenstein, a country that has become rather famous for its cryptocurrency acceptance, will soon be able to purchase digital currencies directly from a bank. Given the royal family’s demonstrated interest in the asset class and the general willingness to embrace cryptocurrency development, the move is perhaps not too surprising.
According to a press release issued by Bank Frick on February 28, 2018, it will be offering a wide variety of cryptocurrencies on its trading platform effective immediately. The initial set of digital currencies available for purchase will include Bitcoin, Ethereum, Litecoin, Ripple and Bitcoin Cash.
The target audience of the bank likely comprises of high net worth individuals and institutional investors, or rather, the type of individuals that already have a sizeable amount of funds in various banking instruments.
For any cryptocurrency exchange or broker, especially those, security is an important consideration. As is traditional for any cryptocurrency exchange, Bank Frick has stated that it will store all of its customers’ cryptocurrency assets in cold wallets, or rather, on computers air-gapped from the internet for the most part. Other security features, however, were not detailed in the press release.
The financial institution in question is already a fully-regulated bank that complies with all know-your-customer related laws at the country and EU level. Thus, it is safe to conclude that the same identification requirements will be carried over for any investor looking to purchase any amount of cryptocurrency from Bank Frick.
The bank also confirms regulatory compliance in its statement,
“At Bank Frick, cryptocurrency investments are subject to the same strict statutory measures as traditional financial transactions,” and “Clients can only invest in cryptocurrencies once they have been fully identified and verified. The verification and identification process also involves checking the origin of the money used to invest in them.”
Even though Bank Frick is a financial institution that primarily caters to Liechtenstein citizens, it has announced that the platform will be available to any European entity interested in it. The Chief Client Officer, Huber Büchel, said,
“Our services are in demand from companies across the whole of Europe. This is because they know that we can offer them reliable support in implementing their business models with cryptocurrencies and blockchains in line with the existing regulatory framework.”
Furthermore, the bank has announced that it will be accepting foreign currencies in exchange for cryptocurrency assets. At this time, investors can transact in US Dollars, Euros or Swiss Francs.
Bank Frick joins a rather exclusive list of banks willing to not only adopt, but also facilitate the buying and selling of cryptocurrencies. With most financial institutions around the world heading in the exact opposite direction, it is clear that Liechtenstein’s banks have other intentions.
Featured image from Shutterstock.
Crypto Trading App Robinhood Expected to Hit $5.6 Billion Valuation with New Funding
Robinhood’s valuation is expected to jump fourfold to around $5.6 billion, driven by the stock brokerage app’s popularity among millennials.
The company, which offers cryptocurrency trades in addition to stock trades, is in the process of securing around $350 million from an investor group led by DST Global, a Russian firm. The group led Robinhood’s last funding round one year ago, valuing the company then at $1.3 billion, according to The Wall Street Journal.
Robinhood chose not to respond to a request for comment.
Investor Expectations High
Robinhood now ranks among the leading 15 private technology firms in the U.S., thanks to investor confidence that it can gain traction in the financial trading market.
The company’s three-year-old app has gained 4 million users, representing a doubling in one year. The gain was driven by an offering of free stock trades that beat the fees of discount brokers.
Whether or not the company can gain enough users to support the cost of premium services, such as “gold” subscriptions starting at $6 per month to trade after hours and borrow capital, remains to be seen. The company earns profits on the interest that it holds in client cash accounts and by selling client trades to market makers.
Robinhood’s median age user was around 30, which means they have less cash to spend than older clients that big brokerages serve. Robinhood expects its younger investors’ assets to increase with time. Eventually, the company expects to offer additional services to its clients. To date, the company has restrained investing in marketing in order to reduce its overhead.
Investors also believe there is an opportunity in the company’s introduction of cryptocurrency trading, trades that are commission free.
Also read: Stock brokerage app Robinhood launches cryptocurrency trading in 5 states
Chasing ETrade Financial Corp.*
Robinhood, at $5.6 billion, is valued at a third of ETrade Financial Corp., with a market cap of $15 billion. Investors looking to earn a good return under the new round of funding are betting Robinhood can approach ETrade Financial’s valuation.
Vladimir Tenev and Baiju Bhatt, a pair of 20-something Stanford University math graduates when they founded Robinhood in 2012, have said they were inspired to make financial services accessible to people regardless of income by the Occupy Wall Street movement in 2011.
Featured image from Shutterstock.
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