A slow week in the crypto markets ended with a bang, as Square became the latest major company to invest in bitcoin. Elsewhere, BitMex’s recent problems continue, South Korea is advancing its digital currency and John McAfee is still weird. Find out why.
Square buys $50 million in bitcoin
Financial services giant Square announced Thursday that it has acquired 4,709 bitcoins at the price of $50 million – representing around 1% of the company's total assets.
Square is led by Twitter co-founder and long-time bitcoin aficionado Jack Dorsey. This isn’t their first foray into the crypto arena, with its mobile payment service Cash App supporting bitcoin trading since 2018.
Square's Chief Financial Officer, Amrita Ahuja, said in a statement: "We believe that bitcoin has the potential to be a more ubiquitous currency in the future. As it grows in adoption, we intend to learn and participate in a disciplined way."
Square shares were trading up about 2.3% midday Thursday.
Square isn’t the first company to divest into bitcoin. Business intelligence firm MicroStrategy has purchased more than $400 million worth of bitcoin over the last few months. John Todaro, director of institutional research for TradeBlock, notes that: “Unlike institutional investment adoption from a fund standpoint, which we have seen in the past, we are now seeing institutional adoption from a corporate standpoint in which bitcoin is being treated less as a speculative investment and more as an inflation resistant reserve asset on corporates’ balance sheets.” Exciting times.
BitMEX CEO steps down amid DoJ accusations
The CEO of Bitcoin derivatives exchange BitMEX and its leadership team have stepped down following allegations the firm was operating illegally and had KYC protocols that left much to be desired.
CEO Arthur Hayes and CTO Samuel Reed, who was arrested by the Department of Justice, have stepped down from all executive management responsibilities with immediate effect. Greg Dwyer, the firm’s head of business development, is taking a leave of absence.
100x Group is the holding platform for HDR Global Trading Limited, the owner and operator of BitMEX. David Wong, chairman of 100x Group said: “These changes to our executive leadership mean we can focus on our core business of offering superior trading opportunities for all our clients through the BitMEX platform, whilst maintaining the highest standards of corporate governance.”
On 1 October, the US Commodity Futures Trading Commission (CFTC) charged BitMEX with money laundering and operating illegally in the US. In a separate indictment on the same date, the US Attorney for the District of New York filed criminal actions against the owners of the exchange itself. Arthur Hayes, Ben Delo and Samuel Reed were all charged for violating the Bank Secrecy Act and conspiracy to violate the act.
Vivien Khoo, COO of 100x Group will become BitMEX’s interim CEO.
South Korea’s central bank set to test digital currency in 2021
The Bank of Korea is set to test its digital currency for pilot transactions next year. According to South Korean state-run news agency, Yonhap, as of Wednesday, the central bank had completed the design and technology review of its digital currency and will now focus on testing it.
The test will determine whether the digital won system operates normally in a “restricted environment.” The Bank of Korea would remain in charge of the issuance and redemption of its digital currency, while private financial institutions would manage distribution.
A bank official told Yonhap: "The CBDC [central bank digital currency] test system can be seen as the process of actually circulating cash.” The central bank plans to use blockchain technology to manage CBDC test transaction details.
The Bank of Korea started its CBDC pilot program in April, and at the time, said the plan would run until December 2021. The bank has indicated the pilot program is no guarantee it’ll launch the digital won.
John McAfee arrested in Spain over US criminal charges
Tech magnate turned crypto evangelist, John McAfee has been arrested in Spain on allegations of tax evasion, according to the US Department of Justice. His extradition to the US is currently pending.
On Monday, DoJ prosecutors unsealed a criminal indictment against McAfee who faces tax evasion charges and wilful failure to file tax returns. If convinced, he could face five years behind bars. The announcement came the same day the US SEC sued McAfee for allegedly pumping initial coin offerings (ICOs) without disclosing he was being paid to do so.
McAfee allegedly received BTC and ETH worth over $11.6 million for promoting seven ICOs in 2017 and 2018. He also received $11.5 million in the promoted tokens.
According to the SEC, McAfee raised a total of $23.2 million projects which raised a whopping total of $41 million.
The SEC is seeking civil penalties and an order prohibiting McAfee from serving as a public officer again in the future. His personal security guard, Jimmy Gale Watson, was also sued in the complaint.