The MacNN podcast for February 7, 2015
This week heralds the return of the long-dormant MacNN podcast! Join this week's hosts, MacNN editor Charles Martin, alongside staff writer Michelle Elbert, as they discuss the events that got our attention, needed further discussion, or just plain tickled our fancy.
Online heroin dealer describes experience, made $60,000 or more per month
The trial of Ross Ulbricht in connection with the online BitCoin-fueled drug market known as Silk Road continued today with the testimony of a buyer-turned-dealer. Previously, the defense had attempted to suggest Ulbricht was framed, while the prosecution brought in an auditor to show that a chunk of Ulbricht's current reserve of BitCoins was obtained through Silk Road-related transactions.
Coinbase Exchange looks to improve stability to cryptocurrency
Coinbase.com, an online Bitcoin wallet site founded in 2012, has announced the start of a new federally-regulated exchange for the digital currency. Coinbase Exchange is available in 24 US states, and stores the user's funds in a special, and now insured, wallet.
Transactions traced between Ulbricht, Silk Road Bitcoin accounts
The latest update in the trial of Ross Ulbricht's involvement with the controversial but now-closed Silk Road contraband market site involves Ulbricht's collection of bitcoins. A researcher who has audited the stash claims that approximately 20 percent of Ulbricht's bitcoin funds were transferred directly from Silk Road to his accounts, a transaction that would have been worth close to $3 million based on the value of the digital currency at the time.
Exchange temporarily closed to migrate site to a more secure host
European Bitcoin exchange Bitstamp suffered a theft yesterday with its operational wallet, used for customer transactions being drained of around 19,000 Bitcoins (roughly $5 million in US dollars) in seconds. While the vast majority of the company's coffers are in cold storage, the service has temporarily shuttered, and warned its users to not deposit any of the virtual currency to previously-used Bitstamp addresses.
Only 7000 coins claimed to have been taken by external theft
Citing sources close to the law enforcement investigation, Japanese media are reporting that the Mt. Gox Bitcoin exchange theft was largely an inside job. A report published today claims that of the 650,000 purloined Bitcoins, only about 7,000 are missing as a result of external theft, with the rest having been stolen by a source internal to the exchange. However, the newspaper stops short of naming any specific suspects in the case.
PayPal, Bitcoin could be other options
New York City is considering upgrading its options for paying parking tickets to include more modern platforms, such as Apple Pay, according to MarketWatch. The focal point would be a new mobile app allowing people to scan a ticket and then use Apple Pay, or other options such as PayPal or potentially Bitcoin. The same app would give drivers the choice to schedule a hearing instead.
Bitcoin payments into Microsoft Account performed by BitPay
Microsoft is embracing Bitcoin, by allowing users of its services to pay using the cryptocurrency. US customers are able to add funds to their Microsoft Account using a Bitcoin wallet, which can then be used to may payments in the Windows, Windows Phone, and Xbox stores, as well as paying for subscriptions for Xbox Live and Xbox Music.
Second auction selling 50,000 bitcoins valued at approximately $20M
The United States Marshals Service (USMS) will be holding a second Bitcoin auction, selling part of a collection seized during the take-down of Silk Road. The auction will involve the sale of 50,000 bitcoins, previously owned by Ross Ulbricht, with the current $400 value for each coin giving the entire collection a total worth of around $20 million when sold.
Bitcoin storage service usable around the world, aims to simplify transactions
Circle, a start-up offering Bitcoin banking facilities, has opened itself up for business after a brief invitation-only period. The service, acting as a simplified Bitcoin wallet, can now be used by anyone in the world rather than an invited few, allowing customers to buy the digital currency and transfer the funds to other online accounts.
Coinbase, GoCoin and BitPay agreements allow processing, Bitcoins not added to wallet
PayPal is slowly embracing Bitcoin, as it said yesterday that it's working with three Bitcoin payment processors to allow merchants to accept the online currency. While Bitcoins aren't being held in the PayPal wallets at this time, the company is taking a step to help merchants that may want to experiment with accepting the currency through the PayPal Payment Hub.
Suit alleges deceptive practices, money dispersion, misuse of company funds
More controversy is further tarnishing virtual currency Bitcoin's reputation. Last week, the US Federal Trade Commission (FTC) filed a civil suit against Butterfly Labs, creator and manufacturer of Bitcoin mining rigs. The suit alleges that the three members of the board of directors have engaged in fraudulent and deceptive practices, plus misappropriation of company funding.
Jack Dorsey encouraged by Apple Pay, does not see it as competition to Square
Square's next generation of payment terminal could allow retailers to accept payments from Bitcoin and Apple Pay, the company head has suggested. In an interview, CEO Jack Dorsey explained that a future version of its cash register system will be able to accept a number of different payment types, on top of the current credit card payments it currently works with.
Owner 'knowingly and intentionally' ran sham operation, while maintaining it wasn't a scam
A Texas court has found that the operator of Bitcoin Savings and Trust (BTCST) must pay back $40.4 million in profits and interest earned in a Ponzi scheme. The case is the result of lawsuit brought against Trendon Shavers for offering securities through BTCST and personal solicitation without being registered with the US Securities and Exchange Commission.
Startup aims to bridge digital currencies, normal currencies, loyalty points with debit card
A startup is attempting to make it easier for people to pay for goods and services using digital currencies. Shift Payments, backed by Y Combinator, is testing a debit card which lets users spend Bitcoin and other cryptocurrencies as if it is a normal fiat currency, with a view to allowing customers to switch between virtual currencies, normal funds, and loyalty points in the future.
Reminds consumers Internet currency is a target for hackers, comes with additional cost
The US Federal Consumer Financial Protection Bureau (CFPB) issued a warning on virtual currencies like Bitcoin and Dogecoin on its website today. In the warning, the CFPB sounds off some well-known issues that generally circle around Internet currencies, such as the risk of hacking, fraud and lack of regulation in holding houses.
Network compromise redirected mining pool traffic to alternate server
Security researchers have discovered a vulnerability in the way cryptocurrencies, such as Bitcoin, are stored in mining pools, allowing for funds to be stolen. Discovered by the Dell SecureWorks Counter Threat Unit, the exploit has allegedly already been used at least once, with one attacker said to have acquired approximately $83,000 using the technique.
Part of sea change in Apple policies
A Bitcoin trading app, Blockchain, has been allowed to return to the iOS App Store, reports note. The title was one of several removed from the App Store early this year during an Apple crackdown. The company's policy is normally to prohibit apps allowing activities which may be illegal in some countries. Although Bitcoin has become increasingly accepted, it still sits in a legal limbo in many regions.
Court order stops holding company from selling assets as part of CoinLab dispute
A US District Court judge in Washington state issued a restraining order yesterday, placing a temporarily restriction on the bitcoins.com domain from being auctioned off. Yesterday, Tibanne KK, the company owned by former Mt. Gox CEO Mark Karpeles, was ordered to account for and hold all assets. The order stems from a legal issue between CoinLab and Mt. Gox dating back to 2013.
Bitcoin added to currency conversion options in Google search
Google has updated its currency-based searches to include results for Bitcoin. Coindesk reports reports the search company is now working with digital wallet service Coinbase to track the price of the digital currency and perform currency conversion functions, just as Google Search does for other currencies. The same conversion can also be performed by the Google Search mobile apps.
Feds lean against Bitcoin, task may be monumental
The Bitcoin Foundation has launched an initiative to educate the US government on cryptocurrencies. The advocacy group has retained the Thorsen French Agency to "introduce Bitcoin and the foundation to Capitol Hill offices, demystify our favorite protocol, explain its benefits, and show that there is a community of serious, thoughtful people and businesses working to deliver those benefits to the United States and the world."
Internet electronics retailer starts taking Bitcoin through partnership with BitPay
Newegg, one of the Internet's largest retailers of all things electronic, announced today that it is now accepting payments with the Internet currency Bitcoin. In a release from the company, Newegg says that customers can begin using the cryptocurrency to pay more than 10.5 million products the company carries.
Currencies like Bitcoin, Dogecoin now legal to put into circulation in the state
Last week, California Governor Jerry Brown signed bill AB 129, regarding the definition of "lawful money," into law. The bill effectively ends a ban on alternative currencies in the state, meaning online currencies such as Bitcoin, Dogecoin and other cryptocurrencies can now be used in commerce transactions. The bill modifies California Corporations Code 107, which previously banned currencies that were "anything but the lawful money of the United States."
Mark Karpelès ends silence on downfall, worried about remaining customer funds
Since the announcement of the Mt. Gox bankruptcy filing in February, CEO Mark Karpelès has remained silent on his feelings and events surrounding the Bitcoin exchange. That changed this week when he gave an exclusive interview to the Wall Street Journal, indicating that he was "scared, frustrated and angry" upon learning the extensive losses the exchange faced.
Winners of seized property to be notified on Monday
The US Marshals Service has completed its auction of the Bitcoins it seized from the raid and shutdown of alleged online drug marketplace Silk Road. The 12-hour auction consisted of nine blocks of 3,000 bitcoin, and one block of 2,757 bitcoins. At current exchange rates, the auction was valued at $17.7 million dollars.
Coin Pocket is first App Store Bitcoin wallet after Apple altered App Store rules
Bitcoin apps taking advantage of Apple's recent rule changes concerning virtual currencies have started to appear in the App Store. Coin Pocket, a bitcoin wallet similar to others previously pulled by Apple before the company changed its policy, can be used to send and receive the currency, includes a "private key sweep" for quicker transfers, and adds a currency conversion checker.
Bitcoin pool seized during Silk Road takedown expected to fetch over $17M
The United States Marshals Service will be selling off the collection of Bitcoin it seized following the take-down of black-market drug site Silk Road. Almost 30,000 Bitcoins will be sold in the online auction on June 27th, with the pool estimated at current exchange rate prices to be worth a total of $17.91 million at the time of writing, down from the $27 million it was originally expected to fetch during initial reports of the sale in January.
Coinbase partnership allows travel booking company to accept online currency
Travel reservation company Expedia has jumped aboard the Bitcoin train to allow travelers to book their hotel stays with the virtual currency. Teaming up with Coinbase, Expedia will now show Bitcoins as a payment option up against other payment forms, such as credit cards and PayPal. Expedia joins the likes of Overstock.com and Dish Network in allowing their customers to pay with the Internet currency.
Agreement requires Erick Voorhees to surrender profits, pay $35000 in fines
Erik Voorhees, a co-founder of FeedZeBirds and SatoshiDice, has settled with the United States Securities and Exchange Commission (SEC) over charges related to selling shares of the two companies. Information from the SEC says that Voorhees had solicited the sale of shares in open channels as early as 2012, netting himself over $15,000 in profit in the process.
New rules simply require compliance with local laws
Apple has quietly changed rules at the App Store to allow for digital currency transactions to take place within apps, Reuters notes. The rules now state that apps "may facilitate transmission of approved virtual currencies provided that they do so in compliance with all state and federal laws for the territories in which the app functions." Apple hasn't identified which currencies it will allow.
Deal with Coinbase allows bitcoin transactions from customers
Satellite provider Dish is teaming up with Coinbase to allow its customers to pay bills with Bitcoins. The deal makes Dish the largest company to date to accept the Internet currency for service transactions. Dish's deal follows other such agreements with Coinbase including online retailers Overstock.com and Tiger Direct.
Karpeles owned Tibanne looking to package Japan, EU trademarks for $1 million
The holding company that has taken over the bankrupt exchange Mt. Gox is looking to offload its trademarks on 'bitcoin' and associated websites. The trademarks registered in Japan and the European Union are included according to a statement from an executive in the company. Tibanne hopes the packaged trademarks will fetch around $1 million in a sale.
Conviction tossed on inappropriate venue, Auernheimer demands recompense
The man accused of hacking personal information out of AT&T servers by the federal government, Andrew "weev" Auernheimer, is demanding that the US Government pay 28,296 Bitcoins ($13.9 million at today's exchange rate) for his time in federal custody. Auernheimer wrote on his Twitter account that "it is time, now that the fraud and violence committed against me has been exposed by the appeals process, to begin making amends to me."
Child star Brock Pierce slammed for heavy debt, sexual misconduct allegations
The Bitcoin Foundation is seeing an exodus of members in the wake of the appointment of heavy Bitcoin investor and former Disney child star Brock Pierce as the new director of the foundation. The departures, on the eve of the cryptocurrency's annual conference, are based on a variety of allegations, including misconduct allegations against Pierce from as early as 2000, in addition to other allegations of misconduct among foundation members.
Enhanced security, money laundering monitoring in free Circle Bitcoin storage
A start-up is attempting to make Bitcoin more accessible, by launching its own online bitcoin storage service. The Boston-based Circle allows users to purchase Bitcoin, store it in their account, and transfer to other Bitcoin accounts or users, with the service attempting to offer a more user-friendly approach when compared to other digital wallet services.
'PayPal of Bitcoin' recipient of largest digital currency capital investment
Entrepreneur Richard Branson has invested in a large Bitcoin payment service. Along with Yahoo founder Jerry Yang, Branson and compatriots have put $30 million into the Bitpay exchange, giving the service the biggest venture capital investment in crypto-currency's short life.
Investor alert issued to raise investor awareness of virtual currency risks
The United States Securities and Exchange Commission (SEC) has issued another investor alert on Bitcoin that follows on from a previous publication. Both warn potential investors of the risks of the virtual currency. Offering a long list to support their alert, the SEC draws more references to the Ponzi scheme nature of the currency, the probability of fraud and what the lack of regulation means.
CTTSO solicits vendors for program to aid military understanding of technologies
A division of the Department of Defense is investigating cryptocurrency, including Bitcoin, for possible links to crime and terrorism activities, according to an article from the International Business Times. The Combating Terrorism Technical Support Office, a department responsible for developing and investigating counterterrorism abilities, created solicitation number N41756-14-Q-3272 in order attract vendors to aid military branches in understanding the developing technology.
Studio responsible for Tony Hawk games folds into Infinity Ward
Video game developers Neversoft and Infinity Ward will see their positions as independent studios under Activision Publishing come to an end, as the two studios merge under the Infinity Ward banner. Neversoft, mostly known for its work on the Tony Hawk Pro Skater series, helped Infinity Ward with the latest installment of the Call of Duty franchise game Ghosts. The Neversoft name will be retired after existing for almost 20 years. The studio was acquired by Activision in 1999.
Offer would conclude class action suit by US, Canadian customers
Bitcoin holders in the US and Canada, holding balances with now-shuttered Mt. Gox, are settling class actions against the exchange. The plaintiffs are agreeing to a proposal by investment company Sunlot Holdings to buy the exchange, and become part owners of the recovered exchange, according to court filings.
Savegox website pops up, proposing case to resurrect Mt. Gox
A seemingly grass-roots effort has been launched to save bankrupt Bitcoin exchange Mt. Gox. The "savegox" website has cropped up, launched by an unnamed group of investors, with the goal of providing "restitution to customers" and as an added benefit to "restore faith in the digital currency." Approximately 750,000 Bitcoins belonging to customers and 100,000 coins belonging to the exchange, valued at over $450 million dollars as of March 1, were said to be lost in the hack when the Mt. Gox systems were breached unnoticed over the course of several years. Mt. Gox says there was a also $27.4 million discrepancy in its bank accounts as of Monday.
CEO Mark Karpeles questioned by six employees about expenses, cash flow
The problems with shuttered and bankrupt Bitcoin exchange Mt. Gox may have been evident to employees as early as two years before its well-publicized meltdown. Six employees reportedly confronted CEO Mark Karpeles over money-handling in the organization, with the group alleging that customer funds were being diverted improperly to other expenses, such as a 3D printer, and a modified car imported from the UK for the CEO.
Bitcoin miners required to declare earned virtual currency
The Internal Revenue Service has declared that Bitcoin should be classed as property for tax purposes, and not as a currency. The ruling, which clarifies the tax-related standings for its supporters, can be applied to virtual currencies, with the US government agency also stating that owners may need to pay more tax or deduct a loss depending on what happens to the value of the currency as it is owned.
Beijing-based exchange freezes accounts and halts withdrawals
Another Bitcoin exchange has run into financial problems, following in the wake of other recent turmoil surrounding the currency after the collapse of Mt. Gox. Vircurex, based in Beijing, is faced with insolvency, causing the company to immediately halt withdrawals. Starting March 24, the company will put a freeze on all customer accounts.
Discovery casts doubts on loss claims, accounting standards
The recently-shuttered and allegedly bankrupted Mt. Gox Bitcoin exchange has now said it has "found" nearly a quarter of the total "stolen" Bitcoins stored in a "wallet" -- the term for a digital file used to store the virtual currency -- that the company was no longer using. The 200,000 coins found represent some $115 million of the $470 million (in current trade value) lost by customers when the exchange closed down.
Filing intended to stave off at least two lawsuits in US
As expected, following its Japanese bankruptcy disclosure, troubled Bitcoin exchange Mt. Gox has filed for Chapter 15 bankruptcy in the US. The filing will temporarily halt US-based lawsuits. The filing will allow potential investors to look at the exchange without legal ramifications, as well as give the exchange time to resolve some of the problems that cropped up over the weekend.
Documents posted purport 951,115 BTC still in accounting documents
Enraged Bitcoin holders are beginning to take the ongoing dispute with shuttered and bankrupt exchange Mt. Gox into their own hands. On March 9, hackers seized Mt. Gox CEO Mark Karpeles' Reddit account, posting what it alleged was proof that the executive was retaining much of the crypto currency that he claimed was lost to "transaction malleability." Additionally, what may be a separate group offered for sale what was alleged to be a 20GB stolen database from Mt. Gox, which it claimed had personal details of all of its users, including scans of passports used for identity verification.
Third high-profile loss in a week may cause further instability in BitCoin
Yet another Bitcoin exchange has shut down. Flexcoin has shuttered, after disclosing that hackers appropriated 896 Bitcoins from its "hot wallet" on a computer facing the Internet. Customers whose coins were stolen will likely recieve nothing, with a small percentage of users whose coins were in a "cold wallet," not Internet-accessible, have already had their coins reimbursed.
Total Bitcoins loss said to be 850,000 due to system weakness
Troubled Bitcoin exchange Mt. Gox filed for bankruptcy protection in Japan on Friday, breaking the silence on the company's position since suspending trading on February 24. The firm admits that it may have lost nearly half a billion dollars worth of the virtual currency when its systems were compromised by hackers. Mt. Gox is said to have $64 million in debts.
Tied to cracked downloads of popular software
A Mac trojan aimed at stealing Bitcoins -- known as OSX/CoinThief -- has been found attached to pirated copies of more mainstream apps, says security firm ESET. Initially the malware was bundled exclusively with Bitcoin-related tools, but ESET says it has now found CoinThief in cracked versions of titles like Angry Birds, BBEdit, Pixelmator, and Delicious Library.