Japan has always been a very interesting country when it comes to cryptocurrency and regulation. It is one of the few companies which has made Bitcoin legal tender. The current approach of self-regulating cryptocurrency is still controversial, but the concept continues to gain a lot of traction regardless.

Self-Regulation Remains a Risk

Bringing more legitimacy to the cryptocurrency industry in Japan will always be a big challenge. That isn't because the government is opposing this industry, as it is doing the exact opposite. The Japanese government has shown a lot of leniency toward cryptocurrency and even made Bitcoin legal tender over a year ago.

Although that initial response was relatively positive, it has become evident that there is still a need for active regulation of the cryptocurrency industry. Considering that exchanges remain subject to hacking and other incidents, having a regulatory framework in place to deal with such incidents is more than warranted.

For the time being, cryptocurrency exchanges engage in self-regulation. It is a bit of a double-edged sword, although their opinions do matter when it comes to establishing a regulatory framework. Without an open dialogue between industry experts and the government, no positive developments are to be expected. Japan is certainly taking an open-minded approach, which is more than one can ask for.

The JVCEA, which is Japan's virtual currency exchange association, is now looking to become officially certified in Japan. Up to this point, the governing body has made all of its decisions in the absence of any official recognition from the government. Although its decisions have been reviewed by the government, the decision-making process has always been a bit "off" in this regard.

Once the JVCEA becomes a certified fund settlement business association, it will be able to onboard additional members and force all partners to comply with regulations and laws. Whether or not the agency will receive this license is an open question, as nothing has been set in stone at this time.

The final decision lies with Japan's FSA, which has closely monitored any developments in the cryptocurrency industry for several years now. Reviewing the 100-page document submitted by the JVCEA will take some time, and no official timeline for a decision has been set. If the JVCEA is approved, Japan will position itself as the "freest" country when it comes to cryptocurrency regulation. It is an example which other countries would do well to follow.

This week, researchers uncovered empirical data confirming what most in the crypto Twittersphere already know – the space if flooded with scam bots: 15,000 of them to be exact, according to Duo Security.

Researchers Find 15K Twitter Crypto Scam Giveaway Bots

Don't @ Me: Hunting Twitter Bots at Scale by Duo Security's Jordan Wright and Olabode Anise is 46 pages of intense fine-tooth combing of data related to the phenomenon of Twitter bots. "Social networks allow people to connect with one another, share ideas, and have healthy conversations. Recently, automated Twitter accounts, or 'bots,' have been making headlines for their effectiveness at spreading spam and malware, as well as influencing this online discussion," the authors began.

Over three months on their way to present findings at Black Hat USA 2018, researchers detail how they "identified botnets, including a spam-spreading botnet case study," Mr. Wright and Mr. Anise explain, though they "specifically looked for automated accounts, not necessarily malicious automated accounts."

Their key findings, published open source, were achieved as they "gathered a dataset of 88 million public Twitter profiles consisting of standard account information represented in the Twitter API, such as screen name, tweet count, followers/following counts, avatar and description. As API limits allow, this dataset was enriched with both the tweets posted by accounts, as well as with targeted social network information (follower/following) information. Practical data science techniques can be applied to create a classifier that is effective at finding automated Twitter accounts, also known as 'bots.'"

Duo Security is based in Ann Arbor, Michigan, and just this month announced being acquired by Cisco. Cisco is interested in the firm because of its zero-trust authentication solution in order to buttress Cisco's own network and cloud security offerings. The deal is worth well over $2 billion, and is expected to finalize in late October of the present year.

Case Study of At Least 15,000 Bots Spreading a Cryptocurrency Scam

"By monitoring the botnet over time," the researchers continued, "we discover ways the bots evolve to evade detection. Our cryptobot scam case study demonstrates that, after finding initial bots using the tools and techniques described in this paper, a thread can be followed that can result in the discovery and unraveling of an entire botnet. For this botnet, we use targeted social network analysis to reveal a unique three-tiered hierarchical structure." 

Furthermore, the paper "provides an in-depth description of the entire process for finding Twitter bots, from gathering the data to performing the analysis." Many of Duo Labs employees "use Twitter as a way to connect to the infosec industry. We were familiar with automated Twitter accounts, and had read previous academic papers covering both techniques on building a dataset of Twitter accounts as well as using various techniques to identify automated accounts from a previously shared dataset."

15,000 Twitter Crypto Scam Giveaway Bots: Duo SecurityFor its part, "Twitter announced that they are taking more proactive action against both automated spam and malicious content by identifying and challenging 'more than 9.9 million potentially spammy or automated accounts per week.' In a follow-up blog post, Twitter also described their plans to remove accounts that had been previously locked due to suspicious activity from follower counts," the researchers noted.

The team doesn't consider the problem solved, however. "We're excited to see these efforts by Twitter and are hopeful that these increased investments will be effective in combating spam and malicious content," they laud. Still their case study "demonstrates that organized botnets are still active and can be discovered with relatively straightforward analysis. By open-sourcing the tools and techniques developed during this research, [they] hope to enable researchers to continue building on [their] work, creating new techniques to identify and flag malicious bots, and helping to keep Twitter and other social networks a place for healthy online discussion and community."

On Tuesday, July 31 a great majority of cryptocurrency prices dropped in value with many coins losing anywhere between 3-10 percent during the last 24-hours. Currently, with the sudden cryptocurrency market turbulence, bears have taken control of the exhausted bulls. In one intra-day of trading, the entire cryptocurrency market capitalization of all 1,600+ coins ($270Bn USD) has lost roughly $25Bn in value.

Digital Asset Prices Turn Bearish as the Entire Cryptocurrency Economy Loses $25 Billion USD

Markets Update: Cryptocurrency Price Trends Turn from Bullish to BearishBearish sentiment is starting to haunt cryptocurrency markets once again as many digital assets saw prices tumble today. Bitcoin Core (BTC) prices dropped to a low of $7,503 on July 31 as the currency's trade volume had started to drift a bit lower after the price hovered around $8,125 the day prior. A large portion of other cryptocurrency markets followed suit with BTC as the top ten virtual currencies are seeing losses across the board of course except for tether (USDT).

Ethereum (ETH) continues to hold the second highest market valuation with a market capitalization that's around $42.28Bn. One ETH is being traded for $418 and the market is down 7.6 percent today. ETH markets are followed by ripple (XRP) which is down 2.8 percent over the last 24-hours as one XRP is trading for $0.42 cents. Lastly, the fifth highest market capitalization held by EOS is also down 6.6 percent and the currency is trading at $7.13 per coin.

Bitcoin Cash Market Action

This Tuesday bitcoin cash (BCH) markets are seeing losses as well as BCH is down 8 percent over the last 24-hours. Bitcoin cash markets are also down 13.2 percent for the last seven days. One BCH is trading for $741, and the decentralized cryptocurrency has a market valuation of around $12.8Bn. The last 24 hours show BCH trade volumes are around $432Mn at the time of publication. The top exchanges swapping the most BCH today include Coinex ($106.53Mn), Huobi Pro ($69.38Mn), Okex ($64.81Mn), Binance ($46.80Mn) and Hitbtc ($34.79Mn).

The top currency traded with BCH on July 31 is tether (USDT) with 55.2 percent of swaps. This is followed by BTC (28.5%), USD (7.6%), QC (2.8), ETH (2.4%) and the KRW (1.2%). Bitcoin cash holds the fifth highest volume over the past 24-hours among all 1,600+ other cryptocurrencies.

BCH/USD Technical Indicators

Looking at the daily and 4-hour charts on Bitfinex and Bitstamp shows bears have grabbed the reins and still have a good portion of control. RSI levels are screaming oversold conditions (33), while the MACd has swooped down to -85. The SMA 100 is far higher now above the longer-term 200 SMA trendline which means BCH bulls may lose a bit more grip over the short term. Many traders can see looking at charts that the price was rolling sideways for close to three days and many were convinced of a bull flag after the inverse head & shoulders. But just before the dip sell orders on popular exchanges worldwide began stacking up. Looking at order books from the current vantage point BCH bulls have some high walls up until $775 but if they can manage to break that resistance we could return to previous levels. On the back side there's solid support between now and $710 but unfortunately, books are thinner until $650.

Markets Update: Cryptocurrency Price Trends Turn from Bullish to Bearish   The Verdict: Flat Volumes and Bearish Sentiment Brings Market Skepticism

Overall skeptics and bearish cheerleaders are hoping for some stronger dips and they just may get them. Volumes across the board for many cryptocurrencies has been getting flatter as each day passes. Traders and enthusiasts are now unsure the upcoming ETF decision will pull prices up until then for two reasons: One the Winklevoss Twins fund was denied again, putting a black cloud over positive vibes toward the Cboe ETF, and secondly everyone is unsure exactly when the Securities and Exchange Commission (SEC) will make their ultimate decision. This week the current market sentiment, and our price verdict, point to far more skepticism and shade towards bullish prices returning soon.

The South Korean government has announced a new set of tax law amendments. Under this proposal, bitcoin exchanges will no longer be eligible for income and corporate tax deductions currently enjoyed by small and medium-sized businesses. The regulators have also been considering imposing capital gains tax on the sale of cryptocurrencies.

Stripping Away Tax Benefits

The South Korean government has announced its proposed Revised Tax Law 2018. In the official statement published Monday, the government wrote, "from next year, virtual currency handling businesses will be excluded from the industries eligible for the tax reduction for SMEs [small and medium-sized enterprises]."

The South Korean government announcing 2018 tax amendments.

News1 explained that crypto exchanges "have been considered as venture companies or small and medium-sized businesses for tax purposes until now," allowing them to benefit from considerable income tax deduction. Citing other favorable tax treatments such as depreciation of assets acquired during the first four years, the publication elaborated:

Under the current tax exemption rules, income tax and corporation tax are reduced by 50% to 100% for five years for business startups, SMEs and venture companies.

Crypto Exchanges to Pay Higher Taxes

South Korea Plans to End Major Tax Benefits for Bitcoin ExchangesAccording to the news outlet, the government has decided to exclude crypto exchanges from the list of entities eligible for SME tax deduction "because the cryptocurrency trading business lacks the effect of creating added value." The revised tax law will be submitted to the National Assembly and, if passed, will go into effect next year.

Crypto exchanges are currently liable to pay corporation tax of up to 22%, Seoul Finance described, adding that "considering that virtual currency exchanges earned huge amounts of money in the last year and earlier this year, it is estimated that the amount of exemption would be considerably large." The publication conveyed that under the current setup:

Bitsum exchange, which is estimated to have net profit of over 250 billion won [~US$223 million] last year, should pay 54.4 billion won [~$48.6 million] in corporate tax but it is expected to save 27.2 billion won [~$24.3 million] since it receives 50% reduction.

However, "taxation on the sale of cryptocurrency was not included in the amendment bill…based on the judgment that more research is needed," the publication emphasized. "The government has been considering imposing capital gains tax virtual currency trading profits since early this year, but no specific taxation bill has come out."

"For the first time ever," Fortune magazine announced, it "has assembled a supplementary honor roll of the most impressive, young superstars who are transforming business at the leading edge of finance and technology." They've selected forty representatives from all over fintech, and each is under forty years old. Among them are many cryptosphere leaders finally getting their due.

Fortune's Most Impressive, Young Superstars List: Crypto Leaders Shine

Bitcoin Dominates Fortune's New Ledger 40 Under 40 List

Traditionally, Fortune's lists comprise go-getters from all sectors of commerce, be they CEOs or Academy Award winners. Indeed, the magazine just came out with their annual 40 Under 40 list, and for sure cryptocurrency luminaries such as Vitalik Buterin and Brian Armstrong were among them. However, for the first time, this year Fortune supplemented their usual list with a special emphasis on financial technology leaders.

Jihan Wu, 32, made the list. The magazine describes him as "the undisputed king of cryptocurrency mining hardware and crypto mining pools." Beijing, China-based Bitmain recently reached a double digit valuation in the billions. He, of course, "has been known as a big proponent of Bitcoin Cash, a controversial fork of Bitcoin. Earlier this year, his company led a $110 million financing round for Circle, the crypto startup with the highest valuation in the U.S. Wu told Fortune earlier this year that he's interested in 'stablecoins,' virtual coins that have a fixed price, and that he plans to diversify Bitmain by developing AI chips."

Amber Baldet, 35, is that rare, new breed of CEO who can comfortably, seamlessly make her way between Wall Street and more radical elements of the ecosystem. She cut her teeth professionally at "JPMorgan Chase," the magazine notes. She would eventually leave "America's biggest bank this year to found a blockchain startup, Clovyr. While on Wall Street, she brought the hoodies (hacker-coders) and the suits (bankers) together, and she led the team that built Quorum, an Ethereum-adapted blockchain built for business. Earlier this month, Baldet, who is an alum of the flagship Fortune 40 Under 40 list, was appointed to the board of the Zcash Foundation, a non-profit group that governs the privacy-centric cryptocurrency Zcash."

Arthur Hayes actually asked his age not be documented. He's known for thinking a bit different than his peers. The online magazine insists before Chicago Merc and Cboe entered the futures market, Mr Hayes' "Bitmex, a crypto derivatives marketplace that allows for leveraged bets of up to 100 times the principal on digital assets from Bitcoin to Cardano," mapped out a space for itself. It wished to be "the most liquid crypto futures exchange," and by the end of last year, it "handled an average $2.1 billion in trades," the magazine insists. That's "far more than the $50 million that changed hands with the Cboe on its first day of launch." Curiously, Mr. Hayes routinely offers he does not own any bitcoin.

Of note as well is our own Bitcoin.com CEO Roger Ver, 39. As is the case with fellow Lister, Mr. Wu, Mr. Ver is "an outspoken evangelist for Bitcoin Cash. The controversial fork," the magazine details, "of the Bitcoin network represents the 'big-block' version of the original Bitcoin blockchain, meaning [it's] designed to handle greater transaction throughput. Fluent in Japanese, Ver runs Bitcoin.com from Tokyo and remains the epicenter of a large cryptocurrency community there."

Read the rest of the Ledger 40 Under 40 List here.

http://fortune.com/the-ledger-40-under-40/ 

Jon E. Montroll, a 37-year-old from Texas which was arrested by the FBI for trying to cover up massive client losses after his exchange was hacked, pleaded guilty to one count of securities fraud and one count of obstruction of justice on Monday. Each charge carries a maximum penalty of 20 years in prison. Montroll operated two bitcoin services, Weexchange which functioned as a bitcoin depository and currency exchange service, and Bitfunder which facilitated the purchase and trading of shares of businesses that listed on the platform. During the summer of 2013, hackers stole approximately 6,000 bitcoins from Weexchange, and, as a result, the two ventures lacked the bitcoin necessary to cover what was owed to users, which he tried to hide.

Manhattan U.S. Attorney Geoffrey S. Berman said: "Montroll deceived his investors and then attempted to deceive the SEC. He repeatedly lied during sworn testimony and misled SEC staff to avoid taking responsibility for the loss of thousands of his customers' bitcoins."

Scammer Fined Over $1.9 Million

The Daily: Exchange Operator Pleads Guilty, Scammer Fined Over $1.9 MillionA federal court has ordered Dillon Michael Dean of Colorado, and his UK-registered company The Entrepreneurs Headquarters Limited (TEH), to pay over $1.9 million in civil monetary penalties and restitution. A judge found that Dean engaged in a fraudulent scheme to solicit bitcoin from the public, lied that customers' funds would be invested in products including binary options, and misappropriated clients' funds. He also failed to register with the CFTC as a Commodity Pool Operator.

According to the findings, from approximately April 2017 to January 18, 2018, Dean solicited at least $499,264.04 worth of bitcoin from at least 127 members of the public. He promised to convert this into fiat and invest it on customers' behalf in a pooled investment, including trading binary options on an online exchange. He lured victims by false claims of trading expertise and promises of high returns in Youtube videos and Facebook posts. But he never actually engaged in trading on behalf of customers, and his purported trading profits were fictitious.

Porn Ransomware?

The Daily: Exchange Operator Pleads Guilty, Scammer Fined Over $1.9 MillionThe Israeli police has announced that its cyber investigators have identified a new type of ransom attack targeting online porn viewers. The warning to the public explained that in recent weeks there have been a number of complaints about ransom demands via e-mail. The messages said that the recipient's computer had malware installed, which activated the camera to film when vising a site displaying sexual content. In order to avoid the distribution of the allegedly filmed videos to all his contacts, the recipient was required to pay a ransom in bitcoin. The message included the recipient's e-mail and password to give it credibility. However, the investigators found out that the threats were not really backed up by videos and that the e-mail addresses and passwords were taken from old sites that contained hacked e-mail addresses.

London Police's Crypto Course

The Daily: Exchange Operator Pleads Guilty, Scammer Fined Over $1.9 MillionA City of London Police spokeswoman has confirmed the launch of a new cryptocurrency course at their Economic Crime Academy. "It is designed to provide delegates with the skills and knowledge required to recognise and manage cryptocurrencies in an investigation. On successful completion of this course, participants will understand how to detect, seize and investigate the use of cryptocurrencies in an investigative context. It will be the first of its kind and has been developed in response to feedback from police officers nationally who felt there wasn't enough training available in this area." She also added that a pilot of the course was already conducted, and another is planned for August.

Two more types of BCH tokenization projects have been announced on July 18, giving the BCH community a wider variety of different ideas that can bring forth the concept of representative tokens into reality on the Bitcoin Cash network.

Bitcoin Cash Community Greeted by Two More Token Creation Systems

No Matter How You Slice It — Token Assets Are Coming to Bitcoin CashThe Bitcoin Cash (BCH) network has seen a lot of development since the last hard fork which debuted the reenabled Satoshi OP_Codes and the upgraded default data-carrier-size. The BCH community and developers have been bolstering the idea of tokenization on the BCH chain. There's been a bunch of ideas so far with Andrew Stone's GROUP proposal and Joannes Vermorel's Tokeda paper. Then this week Bitmain developers revealed the Wormhole project that utilizes a fork of the Omni Layer. Then on Wednesday, two more token ideas have been introduced for the BCH chain — One concept from the Cryptonize.it developers, and another proposal written by a group of six developers including Jonald Fyookball, James Cramer, Unwriter, Mark B. Lundeberg, Calin Culianu, and Ryan X. Charles.

Colored Coins & Cryptonized Cash

No Matter How You Slice It — Token Assets Are Coming to Bitcoin CashThe creators of the platforms Cryptonize.it and the Cashpay wallet explained that they are bringing the Colored Coins protocol to the BCH network. The Colored Coins (CC) protocol debuted for the BTC back in 2013 network by adding specific metadata to the blockchain. This in turn created 'representative tokens' or 'colored coins' that can represent any physical or digital item like stocks, bonds, gold and silver backed coins. The Colored Coin protocol will allow Cryptonize.it the ability to create a currency called Cryptonized Cash (CC) that can be used with Cashpay for discounts and exclusive products.

"Further utility will be added as Cryptonize.it grows — There will be a total of 1 billion CC, without the ability to add more in the future," the developers emphasized on the social media platform Yours.org. "The tokens are always redeemable on Cryptonize.it — One of the most important questions to answer when proposing adoption of a certain framework is what are the use-cases?

Luckily with colored coins, the answer is endless. Colored coins can represent vouchers, coupons, tokens, altcoins or other assets. You can tokenize whatever you want. The first real-world use-case is Cryptonized Cash (CC), an incentive program on Cryptonize.it which is live right now.

The Simple Ledger Protocol

Following the Colored Coins concept, another paper was revealed to the public written by Ryan X. Charles, Mark B. Lundeberg, Calin Culianu, Jonald Fyookball, James Cramer, and the developer Unwriter. The paper called, "Simple Ledger Protocol: A token system for Bitcoin Cash," details a proposal for the BCH network that handles tradeable redeemable tokens without a consensus upgrade. Enhancement proposals such as GROUP have not been able to obtain consensus needed to change the base protocol, explains the group of developers. Simple Ledger Protocol (SLP) utilizes metadata in OP_Return transactions and the SLP creators believe consensus can be achieved by "token users and market participants adhering to a prescribed set of simple rules."

"Because SLP builds on the transaction chain of the existing Bitcoin framework, users can easily verify transactions with SPV/lite wallets within practical boundaries," the paper explains.   

Full validation of a transaction back to its token genesis is possible by supplementing existing transaction-retrieval infrastructure with the integration of SLP consensus rules.

The developers say that the SLP system will be permissionless, simple, robust, non-invasive, extensible, and an implementation plan for rapid ecosystem support. The 26-page paper is extremely detailed and it observes multiple subjects that need attention such as wallet implementations, token address format, proxies, utilizing the Bitdb network, economic implications, and more. The group of six developers revealed they were motivated to present their own token solution and the key to its success will be simplicity. "But will also depend on our taking action to foster the support of the ecosystem," the SLP programmers add.

Of course, the Bitcoin Cash community was pretty thrilled about two more tokenization projects using the BCH chain. One user on the Reddit forum r/btc who enjoyed the SLP paper notes that there has been quite a lot of these proposals lately, "I believe we're hitting some 'tokenization proposal fatigue." Nevertheless, enthusiasts dig the competition and the amount of development dedicated to bringing tokenized assets to the Bitcoin Cash network. The community may end up using a bunch of different color coin methods down the line or perhaps they may just use the superior tokenized system. Whatever the case may be, the race is on to get a system that creates representative tokens using the security of the BCH protocol.