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Charlie Shrem to plead guilty to federal charges related to Bitcoin transactions


shremOne of the most prominent names in Bitcoin will plead guilty to multiple federal charges in a New York court next Thursday, September 4th. According to Reuters, Charlie Shrem, an entrepreneur who’s made millions off of Bitcoin, has made a plea deal with authorities regarding charges that he illicitly transacted Bitcoin with users of the underground marketplace Silk Road. Shrem’s lawyer tells Reuters that he will plead guilty to the charge of unlicensed money transmission, which carries a maximum prison sentence of five years. He was also charged with one count of conspiracy to commit money laundering, and one count of willful failure to file a suspicious activity report with banking authorities. Combined, those charges carry an additional maximum sentence of 25 years in prison. It is not yet know if Shrem’s co-defendant, Robert Faiella (who allegedly purchased Bitcoins from Shrem before marking them up for sale on Silk Road), will also plead guilty. Shrem was arrested at JFK International Airport late this past January.

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HELPING BITCOIN TRANSACT WITH TRADITIONAL BANKS


Calgary Startup that Helps Bitcoin Transact with Traditional Banks Raises $8.5 Million

Calgary’s Redfall Technologies Inc. (a.k.a Vogogo) has raised $8.5 million in funding for its Bitcoin risk management services.

The company raised the money from Cormark Securities Inc., Salman Partners Inc., Clarus Securities Inc., Beacon Securities Limited and Canaccord Genuity Corp.

Vogogo provides comprehensive risk management, security, compliance and payment services, enabling cryptocurrency businesses to work with traditional banks and Fiat currencies more easily. Transacting with traditional banks has been a major hurdle for crypto businesses to date, said Vogogo, and is seen as critical to the wide spread adoption and proliferation of these innovation technologies.

It said its technology and services enable crypto currency businesses to meet strict compliance and risk mitigation requirements of conventional banks and regulators. With effective risk management, compliance, and security in place, Vogogo has “assisted in making Canada a reputable region for crypto businesses.”

VogogoLogo

 

Vogogo has already initiated an expansion into the US and it said that will be complete in a matter of months. As for Canada, it claimed that it “captured and effectively services the Canadian crypto industry.”

“This is a another milestone for Vogogo and an endorsement of our potential,” said CEO Geoff Gordon. “The ability for the global crypto industry to meet the stringent requirements of regulators and traditional banks is one of the most significant challenges for the crypto space. Vogogo unlocks potential for growth, collaboration and innovation in the crypto space.”

Vogogo was founded in 2008, when its team designed, built and launched a web-based payment processing technology. They already had expertise in software development, payments, risk management, and related financial services.

The technology was developed to support multiple electronic payments for both the U.S. and Canadian markets and initially started out with integration into several large web based (E-commerce) businesses.

To date, Vogogo has successfully processed more than $1B in US and Canadian payments.

Bitcoin Startups Are Raking in Record Amounts of VC Cash


VCbitcoin01 Aug 2014 / Beta Beat – At first, bitcoin was just the purview of cryptography nerds and libertarian redditors. Since then, digital currencies have been used to fund everything from World Cup betting rings to congressional elections. Now that bitcoin is out in front of legislators and safer than ever to use, investors are starting to pour record amounts into bitcoin startups.

From April through June of this year, bitcoin startups pulled in a record $76.8 million in investments, which is almost as much as the entirety of 2013, CB Insights reports.

The investments are coming in largely from unicorn VCs, but also angel investors like Brock Pierce,Mighty Ducks child movie star and now syndicate leader of 57 angel investors focused on bitcoin startups.

Early on, there were a handful of notable failures — anyone who remembers the Mt. Gox fiasco will sympathise with investors who were hesitant to enter the game early. But it’s been a while since a bitcoin crisis has made headlines, and investors are obviously more confident that cryptocurrency is more than a passing fad.

In another coming-of-age moment, Coinbase recently became the first bitcoin startup to raise a Series B, pulling in $25 million from Union Square Ventures and Andreessen Horowitz.

The momentum shows no signs of slowing. Fintech is heating up, drawing more and more VC investments, and Bitcoin is a significant share of recent fintech investments.

Read more at http://betabeat.com/2014/08/bitcoin-startups-are-raking-in-record-amounts-of-vc-cash/#ixzz399gyDhWy
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Aug 6 2014: Bitcoin price crashes linked to web search surges


Bitcoin price crashes linked to web search surges

bitcoins
Chatter about Bitcoins on social media can influence the value of the virtual currency
A spike in searches for Bitcoins can be a good predictor of an imminent crash in its value, suggests research.

The conclusion emerged from a study of the web activity and social media chatter surrounding the virtual currency by Swiss computer scientists.

Their analysis of who was taking part in this activity helped to explain the meteoric rise in the value of bitcoins.

It might also offer insights into how online communities adapt and grow, suggested the research team.

Key variable

Bitcoin was a great candidate for research because so much of the activity surrounding it takes place online, wrote the team in a paper published in the Journal of the Royal Society. Bitcoins are a virtual currency which depend on people using their computers to both generate the cyber coins and to verify transactions carried out with them.

Currently one bitcoin can be exchanged for $585 (£347).

Studying the “digital traces” of this activity could help lay bare the variables that govern the way the virtual currency behaves said the team.

The four key variables that emerged from the analysis were:

  • the size of the user base
  • the number of searches for information
  • the amount of information shared
  • price

From this the team at the Federal Institute of Technology in Zurich managed to find two positive feedback loops that steadily influence how much each bitcoin was worth.

The first “reinforcement cycle” involves an increase in the amount of searching for information about bitcoins, which leads to more chatter about the currency and prompts a rise in its value.

“The successive price surges in the Bitcoin economy are largely due to its growing public attention,” said the team.

The second feedback loop involves a rise in search volume which makes more people download the software and join in the mining pools that generate coins. This too tends to lead to a rise in the nominal value of Bitcoins.

“Our analysis suggests that the successive waves of growth of the Bitcoin economy were driven by corresponding waves of new users from public circles gradually opening to the currency” wrote the researchers.

In addition, they found found that search spikes were early indicators of an imminent drop in its value but added that this did not act as a good predictor of the biggest falls in the value of bitcoins.

http://www.bbc.com/news/technology-28665262

5 August 2014 Last updated at 20:32 ET

UK to explore Bitcoin role


UK to explore Bitcoin role – George Osborne

bitcoin accepted here

The government is to explore the role that digital currencies such as Bitcoin could play in the financial system and whether they need to be regulated.

Chancellor George Osborne has set out measures he said would make Britain the “global centre of financial innovation”.

Bitcoin is not controlled by a central bank but is growing in popularity.

Other measures include plans to make it easier for businesses to get loans from sources other than banks.

Speaking at the Innovate Finance conference in London, Mr Osborne said the measures would help firms to “grow and succeed”.

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How Bitcoins workBitcoin is often referred to as a new kind of currency.

But it may be better to think of its units as being virtual tokens that have value because enough people believe they do and there is a finite number of them.

Each bitcoin is represented by a unique online registration number.

These numbers are created through a process called “mining”, which involves a computer solving a difficult mathematical problem with a 64-digit solution.

Each time a problem is solved the computer’s owner is rewarded with bitcoins.

To receive a bitcoin, a user must also have a Bitcoin address – a randomly generated string of 27 to 34 letters and numbers – which acts as a kind of virtual postbox to and from which the bitcoins are sent.

Since there is no registry of these addresses, people can use them to protect their anonymity when making a transaction.

These addresses are in turn stored in Bitcoin wallets, which are used to manage savings. They operate like privately run bank accounts – with the proviso that if the data is lost, so are the bitcoins contained.

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George Osborne

‘Stimulate innovation’The chancellor said that it was “only by harnessing innovations in finance, alongside our existing world class knowledge and skills in financial services, that we’ll ensure Britain’s financial sector continues to meet the diverse needs of businesses and consumers here and around the globe”.

As part of the drive, he announced a government investigation into the potential for virtual and digital currencies such as Bitcoin to encourage innovation in the UK’s financial sector, while also examining their potential risks.

More than 60,000 online retailers now accept virtual currencies worldwide and the growing popularity has seen backers of the currencies push for greater mainstream adoption. However, their use has also been linked to illegal activity online.

BBC technology correspondent Rory Cellan-Jones said: “Enthusiasts say it is the future of money, detractors claim that it is extremely volatile and is used mainly by drug dealers and money launderers.

“Now the government says it will examine whether this and other virtual currencies should be regulated, how they could help stimulate innovation – and their potential risks.”

Small businessesMr Osborne also outlined plans to introduce legislation to help small and medium-sized businesses access alternative sources of finance if they have been turned down for finance by their bank.

He said the government would encourage the growth of “alternative finance providers” – a major part of the financial and technology, or FinTech sector.

Business Secretary Vince Cable said small businesses often “give up” applying for finance if they have been turned down by a bank.

Stuart Law, chief executive of the alternative finance provider Assetz Capital, said: “Part of the problem with banks is that they often take several months to approve or reject a loan application.

“As a result, many rejected businesses will have wasted three months already, and will often have missed the opportunity that they needed the money for.

“What is needed is greater awareness of alternative sources of finance at the application stage.”

The government will publish a strategy document later this year setting out how it intends to make the UK the global centre of financial innovation.

http://www.bbc.com/news/uk-28670414

BitCoin, I think it might be the inevitable. Ebay, PayPal, Overstock and BitCoin ATMS


Entrepreneur Magazine reports:

When it comes to major retailers accepting payment in Bitcoin, Overstock and TigerDirect are only the beginning.

bitcoins

This revelation came in testimony by Fred Ehrsam, co-founder of the Bitcoin exchange and wallet service Coinbase, during the second day of hearings organized by New York state’s top banking regulator to discuss the promise and peril of cryptocurrencies.

Ehrsam described how the Bitcoin economy has been going through a speculative phase, with people around the world driving up the digital currency’s value enormously in terms of U.S. dollars, euros, Japanese yen and other national currencies. But now, he said, the market is beginning to shift away from speculation and toward spending.

“One great beacon here is major retailers like Overstock  — and there have been others — hopping onboard,” said Ehrsam, whose startup’s service makes it possible for Overstock to accept bitcoins in exchange for its products. “There are others of similar stature in the pipeline.”

Related: Bitcoin ATMs Are Spreading Across the World

Already, 21,000 merchants are using Coinbase to accept Bitcoin from customers. Overstock, for one, is reaping the benefits of opening itself to the new form of money. Since announcing its acceptance of Bitcoin on Jan. 9, the retailer has received nearly 3,000 orders in Bitcoin, with a total value of more than $600,000.

TigerDirect, a Fountainbleau, Fla.-based online and brick-and-mortar retailer of electronics, experienced similar results when it began accepting bitcoins on Jan. 23. Within three days of the company’s announcement, it reportedly processed more than $500,000 in Bitcoin payments.

Jonathan Johnson, the executive vice chairman of Overstock’s board of directors, testified Wednesday before members of the New York Department of Financial Services that Overstock uses Coinbase to immediately translate any bitcoins it receives into U.S. dollars. Because of this instant exchange, said Johnson, the company is not exposed to the ups and downs of the Bitcoin market, which has seen wild price fluctuations over time. “Our Bitcoin currency risk is nearly nonexistent,” he told regulators.

Coinbase, which is located in San Francisco, is one of the most prominent Bitcoin startups in the United States, allowing individuals to buy and sell Bitcoin with a U.S. bank account and allowing merchants, including Overstock, to accept the digital currency as payment.

Last month, Coinbase announced that it had raised $25 million in a Series B round led by venture capital firm Andreessen Horowitz — the largest fundraise ever by a Bitcoin business. If the startup is indeed becoming the service of choice for top-flight merchants, then it’s already living up to the prediction of Andreessen Horowitz’s Chris Dixon, made at the time of the Series B, that Coinbase will “significantly accelerate Bitcoin’s proliferation.”

Asked what was the incentive for retailers to accept Bitcoin or another digital currency as payment, Johnson’s rationale was simple. “We are merchants, and we are willing to accept any practical form of exchange” that allows the company to sell goods in exchange for value, he said.

Most of the nearly 3,000 Bitcoin spenders were first-time Overstock customers, he added.

For the time being, however, there are limits to the company’s embrace of digital currency. Overstock, which is based in Salt Lake City, accepts Bitcoin only on domestic U.S. orders, and mobile orders with Bitcoin are not yet possible on the merchant’s website.

Related: These Angel Investors Want to Make Bitcoin ‘Sexy’ for Average People

As for the bugaboo of regulation, a primary concern of entrepreneurs and investors in the nascent Bitcoin market, Ehrsam admitted that further requirements for digital currency startups are both inevitable and necessary. “Once you open up a business that’s moving money around, bad stuff can happen right out of the gate,” he said.

Although new regulation is likely, the hearings held in lower Manhattan on Tuesday and Wednesday have been largely positive on the subject of digital currencies’ potential benefits to the economies of New York state and of the U.S. as a whole. Even a Wednesday morning panel of federal and state prosecutors paid lip service to Bitcoin’s legitimate uses.

Among the founders and investors who testified, some made dramatic claims about the ability of Bitcoin to revolutionize ecommerce, the payment processing and banking industries and even the exchange of stocks, bonds, contracts and property deeds. Others, including Ehrsam, were careful not to raise expectations too high for mass adoption of Bitcoin. “One should expect volatility in the near term,” he said. “We are a long way away from a world in which things just stay in Bitcoin all the time.”

Tiger Direct accepting Bitcoin and eBay allows bitcoin sales


I find that there is a lot of confusion and dismissal in regards to BitCoin.  But now that major retailers are getting on board, I think it warrants a second look.  But I think they need to distance themselves from the illegal activity (such as Silk Road) which is exactly what The Bitcoin Foundation, an organization dedicated to evangelizing the crypto-currency, is distancing itself from a bitcoin exchange founder accused of laundering money to online drug dealers.

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The foundation said that it and Charlie Shrem, who was arrested on Tuesday for scheming to sell over $1 million in bitcoins to drug traffickers, “mutually decided” that it would be best for him to resign from the Bitcoin Foundation’s board.

“The foundation does not condone illegal activities and values transparency, accountability and a high level of responsibility towards its members and overall community,” the charitable foundation said in a blog post. Its self-proclaimed mission is to standardize, protect and promote the untraceable electronic currency.

TigerDirect announced in January 2014 that they are now accepting Bitcoin.

logo-tigerdirecthttp://www.tigerdirect.com/bitcoin/indexus.asp?cm_re=Homepage-_-Spot+01a-_-CatId_campaign_bitcoinTakeover

And as far as eBay and PayPal,  PayPal President David Marcus tweeted “We’re believers in BTC,” eBay’s US and UK branches say they will let people sell digital currencies in the classified ads sections of the sites.

It seemed like it was only a matter of time before e-commerce giant eBay and its payment platform PayPal addressed the sale and use of Bitcoin on its sites. And, despite concern from government regulators, it appears the company believes in virtual currencies — so much so, that it will soon start allowing their sale on its US and UK sites.
Last week, PayPal President David Marcus tweeted “To clarify: we have no policies against using PayPal to sell Bitcoin mining rigs. We don’t support any currency txn whether fiat or BTC… for a host of regulatory issues. But we treat BTC and any FX txn the same way. We’re believers in BTC though.”
Then, a couple of days later, eBay UK sent an e-mail to one of its merchants that was published on Reddit, which said the company plans to open a “Virtual Currency” category for the sale of Bitcoin and other digital currencies on the UK site.
Please know that per our recent policy update, Virtual Currency (i.e. Bitcoin and Litecoin), whether digitally or physically delivered, cannot be listed in Auction-style or Buy-It-Now listing formats. eBay is opening a Virtual Currency category to allow the sale of virtual currency in Classified Ads format on February 10, 2014. We request that you do not list these items until that date. Please be informed that repeated breach of the policy may further jeopardize your account status. To avoid any inconvenience in future, we’d appreciated it if you go through our help pages or contact us before listing any such items.
While eBay US and UK will start allowing Bitcoin to be sold in its classified ads format, it won’t yet let users sell the currency in the auction or buy-it-now formats. Additionally, all transactions will be required to happen outside of eBay. A eBay UK spokesman told CNET that virtual currency sales will only be allowed on eBay US and eBay UK for now; it’s unclear if the policy will spread to other countries where eBay operates.
“To promote a trustworthy marketplace and ensure compliance with applicable regulations, eBay is updating its Currency Policy,” eBay UK spokesman Steve Heywood told CNET in an e-mail. “The updated policy clarifies that listings for Bitcoin and other similar virtual currencies must be listed in the Virtual Currency Category in the Classified Ad format. This applies to both the US (effective immediately) and the UK (effective 10 February).”
Marcus told CNET in an interview last month, “I really like Bitcoin. I own bitcoins.” But, he also said he’s not yet ready to let people link their Bitcoin wallets with their PayPal accounts. “Whenever the regulatory framework is clearer, and the volatility comes down, then we’ll consider it,” he said.
Bitcoin has proven that it can do well as a traded currency. It’s been around since 2009, but didn’t really get going until 2011 when it was worth $2 per coin. By 2013, the currency had climbed to $20 per coin, and then jumped to $266 last April. Within the past couple of months, it had another price jump and is now hovering around $1,000.
While eBay appears to be opening its doors to virtual currency, China’s largest e-commerce site Alibaba shut the door on Bitcoin earlier this month. The company announced that the sale of Bitcoins on its Web site is now banned. While the majority of site’s sales are made via Taobao’s Alipay system, a handful of merchants were accepting Bitcoin payments or selling the digital currency. [Via CoinDesk]

Something seems wrong here: companies that get “robbed” usually don’t find $100 million


Well, as many of my blog followers know, I have had an interest in BitCoin.  I have honestly thought it was an interesting idea and was hopeful that this would really become a legitimate currency.  Even further, I have been hestitant to even judge that it’s just for criminals, despite all the criminal related activity.  But now, I have to ask “how can you claim to be robbed of  everything (approx $850 million) and then after going out of business & then suddenly find $100 million?”  I’m not accusing mind you, just speculating and pondering.bitcoin111Now, if you’re wondering the details about it, please read on…

(AP) – Bankrupt bitcoin exchange Mt. Gox said it found 200,000 bitcoins, which were previously thought stolen, in disused electronic wallets. Another 650,000 bitcoins remain unaccounted for.

The Tokyo-based company said in a statement posted on its website Thursday that the 200,000 bitcoins were identified Mar. 7 after “old format” wallets were searched as part of Mt. Gox’s bankruptcy proceedings.

The online exchange for the virtual currency was unplugged in late February as rumors of its insolvency swirled, adding to doubts about the viability of bitcoins overall.

It then filed for bankruptcy protection in Tokyo and said nearly all its 850,000 bitcoins were missing, most likely as a result of theft. About 750,000 of the bitcoins belonged to people who used the Mt. Gox exchange.

At current prices, the rediscovered bitcoins have a market value of about $120 million.

Mt. Gox’s problems have been a setback for bitcoin, a virtual currency that has grown in popularity since its 2009 creation as a way to make transactions across borders without third parties such as banks.

The restoration of some of the missing virtual currency is potentially good news for bitcoin enthusiasts who invested at Mt. Gox but also raises further questions about the running of the exchange.

Mt. Gox’s statement said the 200,000 bitcoins had been moved to offline wallets. It didn’t specify the type but offline wallets include USB sticks and paper documents.

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