Cryptocurrency Highlights Of The Week

Ethereum has successfully hard-forked, and Charlie Shrem has been released from prison. Here are the cryptocurrency hightlights of week 29:

  • Ethereum has successfully hard-forked at block number 1,920,000 to dismantle The DAO and turn it into a refund contract. Shortly after the hard-fork had occured it became apparent that there was strong support for the updated software. DAO token holders subsequebtly gained the ability to reclaim 1 ether for every 100 tokens held. In the first 24 hours after the fork half of the ether in the refund contract had already been reclaimed this way. The success of the fork was also celebrated by Bitcoiners hoping to fork Bitcoin to increase its block size limit to 2MB. For example Coinbase CEO Brian Armstrong used the outcome to argue “the bitcoin community misdiagnosed the risk [of hard-forks]” and express hope that “we start to see hard forks as an elegant upgrade/voting mechanism, not something to be feared that results in multiple coins”.

  • Bitcoin advocate and former CEO of BitInstant, Charlie Shrem, has been released from prison after serving a two year sentence after pleading guilty to one count of Operating an Unlicensed Money Transmitting Business. Specifically, prosecutors accused Shrem of willfully neglecting to report unlawful transactions that were conducted through BitIstant by Silk Road user Robert Faiella (“BTCKing”). On his own blog Shrem writes: “Currently I’m home in southern Pennsylvania where Courtney and I have relocated temporarily. We will spend the summer months enjoying the outdoors, good food, family, friends and the small things that I missed while I was away, and at the same time transition back into normal life. I’m grateful for the opportunity to be back home.”

  • Users of cryptocurrency exchange Kraken (and others as well) should enable two factor authentication immediately, as several complaints have surfaced from users that had their accounts compromised recently. The security breaches are most likely related to users being careless with their passwords or due to reusing passwords across services according to Kraken. The exchange is still investigating several claims, but at least accounts with two factor authentication enabled appear to be safe.

  • Founder of the Bitcoin Savings and Trust company (a classic Ponzi scheme), Trendon Shavers, has been sentenced to 18 months in prison and also ordered to pay back $1.25 million to the victims. Authorities considered the case to be the first federal Bitcoin securities fraud, and the sentencing therefore marks an important milestone in the fight against cryptocurrency related fraud. Shavers himself told the judge “I know I messed up and know people lost a lot of money. It was never my intention to hurt anyone and especially not those that had put their trust in me and my word. I had a business in a small community that was unregulated, unfiltered, that went belly up because of my greed. To this day, I know where those coins went and who it was, but it was my fault, my doing that caused the hardest thing in my life to occur and I take full responsibility for it.” Shavers had mainly used investors’ money to “cover his rent, car payments, groceries and other family expenses” according to court documents. In any case the fight against cryptocurrency related fraud continues, as many similar scams are still being run today. A good number of these have been listed on Digiconomist, and other (not included) services may be evaluated using the recently added Fraud Assessment Tool.