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Photographer: Chris Ratcliffe/Bloomberg Bitcoin Dives After SEC Says Crypto Platforms Must Be Registered


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Bitcoin slumped back below $10,000 after the U.S. Securities and Exchange Commission reiterated that many online trading platforms for digital assets should register with the agency as exchanges.

The largest cryptocurrency dropped as much as 13 percent to $9,416 after the SEC statement boosted concern that tightening regulation may limit trading. Bitcoin is down about 50 percent from its high of almost $20,000 in December in part because regulators worldwide have clamped down on trading, mining and initial coin offerings. Adding to concern is speculation that Asia-based Binance, one of the largest exchanges, has been hacked.

 
 
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“If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration,” the SEC said in the statement Wednesday.

 
 

Some of the largest cryptocurrency trading platforms, like Coinbase Inc.’s  GDAX, aren’t registered as a exchange with the SEC, and instead have money transmission licenses with separate states. In the case of Gemini, it’s regulated by the New York State Department of Financial Services as a trust company, according to its website. Templum LLC is an affiliate to Liquid M Capital, which is registered as an alternative trading system with the SEC. Overstock.com Inc.’s tZero says it aims to be a fully-compliant trading platform.

Many platforms are referring to themselves as “exchanges,” which can give the “misimpression” to investors that they are regulated or meet the regulatory standards of a national securities exchange, the SEC said in its statement, warning that it doesn’t review the trading protocols used by these platforms and that access to a platform’s trading services may not be the same for all users.

Read More: SEC Is Said to Issue Subpoenas in Hunt for Fraudulent ICOs

The SEC statement was issued by its trading and markets unit and its enforcement division, which investigates misconduct and fines firms for violating securities rules. The enforcement division’s involvement shows the potential pitfalls for digital-coin platforms that don’t heed the SEC’s warning to register with the agency: they could be sued and shut down.

Exchanges that register with the agency have a high compliance burden, including being subject to inspections. They are also required to police their markets and follow SEC rules designed to ensure fair trading.

Users of Binance complained online that their accounts got hacked. Binance users on social networks Reddit and Twitter said hackers sold their smaller coins and bought a cryptocurrency called Viacoin, which is up 28 percent today, according to CoinMarketCap.

“All funds are safe,” wrote Zhao Changpeng, chief executive officer of Binance, in a Binance tweet">tweet Wednesday. “There were irregularities in trading activity, automatic alarms triggered. Some accounts may have been compromised by phishing from before. We are still investigating.”

— With assistance by Jesse Westbrook

https://www.bloomberg.com/news/articles/2018-03-07/bitcoin-dives-after-sec-says-crypto-platforms-must-be-registered?utm_source=yahoo&utm_medium=bd&utm_campaign=headline&cmpId=yhoo.headline&yptr=yahoo

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Bitcoin price drops 10% as hackers exploit Binance’s API keys

Welcome to another rollercoaster day for the cryptocurrency community. In just a few minutes, bitcoin price crashed from $10,740 to $9,690, which represents a 10.8 percent crash.

As always, it’s a bit hard to know for sure what’s happening. But one company in particular is having a bad day. Cryptocurrency exchange Binance has spotted some unusual activities and halted withdrawals.

Binance is one of the biggest exchanges out there. According to CoinMarketCap, it’s one of the 4 biggest exchanges for the top cryptocurrencies when it comes to traded volume.

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Many people noticed something highly unusual with Viacoin happening right before the crash. There was a huge increase in buy orders for Viacoins on Binance. In just a few minutes, Viacoin’s market capitalization jumped from $64 million to $159 million

Binance looked into it and noticed unauthorized sell orders. “We are investigating reports of some users having issues with their funds. Our team is aware and investigating the issue as we speak,” the company wrote on Reddit. “As of this moment, the only confirmed victims have registered API keys (to use with trading bots or otherwise). There is no evidence of the Binance platform being compromised.”

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So it seems like a third-party service or app got compromised. Users of that third-party app were relying on API keys to control Binance accounts. A hacker may have developed a bot that submits orders at the same time (7:00 AM Pacific).

While the Binance team halted withdrawals, it might be too late. It’s also possible that the hacker already had a big position in Viacoin on another exchange. The hacker could have sold a big pile of Viacoins shortly after manipulating the price on Binance.

In all cases, it proves once again that security is a big issue when it comes to cryptocurrencies. Don’t store your coins on an exchange. Use a hardware wallet or a wallet that lets you control the private keys.

Disclosure: I own small amounts of various cryptocurrencies.

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