IRS Addresses Taxing Crypto Received in Microtasks, Swiss Enable Crypto Payments
By: Robert A. Musiala Jr.
Late last week, the U.S. Internal Revenue Service (IRS) released a memorandum on the topic “Taxation of Virtual Currency Received in the Crowdsourcing Labor Market.” The memorandum discusses “the tax consequences for an individual who receives convertible virtual currency for performing microtasks through a crowdsourcing or similar platform.” According to the memorandum, examples of this type of activity include being paid in bitcoin or other convertible virtual currency in exchange for processing data, reviewing images, posting reviews for apps, reaching gaming milestones, completing quizzes or surveys, or registering accounts for online services. The memorandum concludes that in these circumstances, a taxpayer “has received consideration in exchange for performing a service, and the convertible virtual currency received is taxable as ordinary income.”
In Switzerland, the canton of Zug recently announced that beginning next February, citizens and companies based in Zug will be able to pay their taxes in bitcoin or ether, within certain limitations. In more news from Switzerland, a major Swiss health insurance provider has announced that it will begin allowing its customers to make payments in bitcoin and ether. Finally, according to reports, the first online sale has been made using a stablecoin pegged to the Swiss franc. The stablecoin, DCHF, is pegged 1:1 to the Swiss franc and is issued by a Swiss financial services firm. The DCHF was reportedly used to purchase a computing device from a major Swiss online retailer.
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Blockchain Shipping Platforms TradeLens and ShipChain Expand Networks
By: Joanna F. Wasick
Portbased, a subsidiary of the ports of Amsterdam and Rotterdam that manages digital port infrastructure and core processes in the ports, recently completed the first phase of connecting with the TradeLens blockchain-based platform, in an effort to create a connection between the Dutch ports and a larger global range of carriers, ports, terminals and overseas inland providers. The first phase of the project is focused on sending customs clearance messages and related data.
Earlier this week, ShipChain, a decentralized freight and logistics platform operating on the Ethereum network, announced the launch of its mainnet, a public delegated proof of stake sidechain of the Ethereum network. “Mainnet” is the term used to describe when a blockchain protocol is fully developed and deployed, meaning that transactions are being broadcasted, verified and recorded on the distributed ledger. According to ShipChain, its blockchain solution offers less congestion than the Ethereum mainnet, and otherwise reduces costs for its users by moving the cost of deployment and contract use away from end users, simplifying and improving the user’s experience. The company’s CEO stated, “Put simply, we can now fully deliver on blockchain’s promise to enable those in the business of trade and logistics to do business with anyone or anything in the world at any transaction size and without an intermediary.”
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North Korean Crypto Hacks Laundered by Chinese; Crypto Compliance Tools Launch
By: Teresa Goody Guillén
The Department of Justice (DOJ) lodged a civil forfeiture complaint that alleges North Korean actors hacked two cryptocurrency exchanges and laundered the funds through Chinese over-the-counter cryptocurrency traders. A DOJ official stated that the “action publicly exposes the ongoing connections between North Korea’s cyber-hacking program and a Chinese cryptocurrency money laundering network.” The complaint alleges the hackers stole over $272,000 of cryptocurrency from an exchange and converted the cryptocurrency into bitcoin, tether and other cryptocurrencies. The DOJ also alleges that a North Korea-associated hacker stole nearly $2.5 million in cryptocurrencies from a U.S. company and laundered it through over 100 accounts at another virtual currency exchange.
In South Korea, law enforcement has reportedly seized Bithumb, one of the country’s largest cryptocurrency exchanges by trading volume. The enforcement action is reportedly linked to an alleged fraud involving a $25 million token sale hosted on the exchange and a proposed acquisition by a Singapore platform.
The world’s largest cryptocurrency exchange and a privacy-centric blockchain developer have announced they are building a platform to facilitate private intelligence sharing, and will reportedly offer “real-time fraud analysis to fight cryptocurrency hacks, theft, and laundering.” The platform is anticipated to enable exchanges to share intelligence concerning transactions processed on the Bitcoin, Ethereum, Tron and Eos blockchains, with plans to support additional networks by the end of the year.
A new solution has been announced to drive compliance with the Financial Action Task Force’s Travel Rule. According to a press release, the solution, called Veriscope, allows Virtual Asset Service Providers (VASPs) to discover each other on a decentralized network, enabling them to comply with Know Your Customer and anti-money laundering regulations, while protecting user data and privacy.
A cryptocurrency intelligence company has reportedly developed tools for the U.S. Department of Homeland Security to track transactions of the privacy coin Monero. According to a press release, the new tool will provide law enforcement with assistance investigating Monero transactions and addresses.
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FBI Thwarts Plot Tied to Bitcoin Bribe, Ethereum Classic Suffers 51% Attack
By: Jordan R. Silversmith
According to reports, the FBI and a major electric vehicle company recently thwarted a $4 million ransomware attack on the company by a group of Russian nationals. On Aug. 22, the FBI arrested a 27-year-old Russian man in Los Angeles. The defendant allegedly tried to recruit an employee of the company to assist in the installation of a targeted ransomware attack on the company’s network in return for a bribe of $1 million. According to reports, the $1 million bribe was to be paid in bitcoin.
The Ethereum Classic blockchain endured another 51% attack last Sunday, its third such attack this month. While the first two attacks reorganized 3,693 and 4,000 blocks, respectively, this most recent attack reorganized over 7,000 blocks, equivalent to two days’ worth of mining. After the first attacks, some exchanges considered delisting the Ethereum Classic cryptocurrency, ETC. Now a leading crypto derivatives exchange is reconsidering its ETC perpetual futures contracts. According to reports, ETC value seems largely unaffected by the attacks, trading at less than 4% below its price during the second attack. In other hacking news, analysts investigating a recent hack that robbed an individual of 1,400 bitcoin via their Electrum wallet have reportedly linked the hacker to various transactions on a major global cryptocurrency exchange.
Wasabi Wallet recently announced it is updating the design of its CoinJoin transactions to permit bitcoin mixing with different values. Currently, Wasabi Wallet relies on the ZeroLink protocol and blind signatures for its CoinJoin mixing protocol to obscure a bitcoin’s transaction history. The design change, dubbed “WabiSabi,” would allow users to use CoinJoin with different values than their peers use. The protocol is still in the early stages of development, and the white paper, which was shown to the Bitcoin developer mailing list mid-June, is reportedly still under peer review.
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