Colorado Hospital Patient Information System Hit by Crypto Ransomware

Colorado Hospital Patient Information System Hit by Crypto Ransomware

Parkview Medical Center’s system for storing patient information was infected with ransomware and rendered inoperable

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Hackers have infected the infrastructure of Parkview Medical Center — the largest health center in Pueblo County, Colorado — with cryptocurrency ransomware.

Citing a hospital employee, Fox News reported on April 24 that Meditech — the Parkview Medical Center’s system for storing patient information — was infected with ransomware and rendered inoperable. The hospital confirmed the incident in a statement:

“On Tuesday, April 21, Parkview Medical Center was the target  of a cyber-incident which has resulted in an outage in a number of our IT systems.”

As Cointelegraph recently reported, ransomware attacks against hospitals are ongoing, despite the fall in the overall number of attacks amid the coronavirus crisis.

Parkview Medical Center also told Fox that it has switched to a paper record system to track and treat patients:

“Upon learning of the incident, Parkview immediately engaged leading third-party forensic experts to investigate and mitigation is well underway. Patient care is always our first priority. Patients will not see any impact to the level or quality of care being delivered.”

Ransomware is a major cybersecurity threat

Ransomware malware is rapidly evolving and is increasingly viewed by many as a major — if not the biggest — cybersecurity threat. While nearly all ransomware discovered so far demands a ransom in cryptocurrencies, cybersecurity firm Check Point recently unveiled a new ransomware attack wherein the attackers require credit card payment.

As Cointelegraph reported earlier this month, another innovative ransomware recently started its switch from Bitcoin (BTC) to Monero (XMR) in an attempt to protect the cybercriminal’s identity.


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Parkview Medical Center’s system for storing patient information was infected with ransomware and rendered inoperable

Madrid Team Builds Iota-Based Decentralized Information Platform to Combat Coronavirus

Madrid Team Builds Iota-Based Decentralized Information Platform to Combat Coronavirus

A team based in Madrid, one of the epicenters of the coronavirus pandemic, has released an Iota Tango platform that helps combat the coronavirus

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A team based in Madrid, one of the epicenters of the coronavirus pandemic, has released an Iota Tango platform that helps combat the coronavirus.

AidSquad

GeoDB is a decentralized peer-to-peer big data sharing ecosystem which returns value to its creators, the users. Luis Gelado, GeoDB CEO and founder shared with Cointelegraph his rationale for creating AidSquad:

“Having stayed home for a few weeks, one weekend, I felt a little bored, so I started thinking: we have to do something. We have a chance to develop something for a concrete problem, give back to society”.

Source: GeoDB

A user inputs his Personal Health Record (PHR) — age, gender, symptoms associated with the COVID-19, and the app also collects the user’s approximate location. The data are anonymously stored in Iota tangle. Based on this data, heatmaps can be generated that visualize the spread of the virus and contagion hotspots.

Source: GeoDB

The app is currently only available as an Android Package Kit (apk). According to Gelado, both Apple Store and Google Play temporarily barred all new COVID-19 apps because too many unscrupulous developers were taking advantage of the situation. However, he expects the app to be accepted to both stores in a couple of weeks.

Source: GeoDB

The app rewards users for sharing data with “karma points” and Aid Squad tokens. Karma points are a gamification device similar to the one employed by Duolingo, whereas, AidSquad tokens are donated to the user’s favorite charitable cause. 

Government is not doing its job

Gelado states that Madrileños are upset with the government’s inability to combat the spread of the virus effectively and it’s up to the people to feel the void:

“People are angry with politicians. We have the right to know. They don’t provide enough information. We wanted to build a network that would exchange information in a public way while protecting privacy. The government of Madrid created some tools, but you have to share so much personal information.”

The beauty of the decentralized world is that an idea born in Madrid could benefit people anywhere in the world including the U.S. which on March 26 has become the world leader in confirmed coronavirus cases.


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A team based in Madrid, one of the epicenters of the coronavirus pandemic, has released an Iota Tango platform that helps combat the coronavirus

Argentinean Gov’t Blockchain Hacked to Spread Fake News on Coronavirus

Argentinean Gov’t Blockchain Hacked to Spread Fake News on Coronavirus

False information on the Coronavirus pandemic spread across Argentina’s blockchain-based government announcement

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In the midst of the global emergency caused by the Coronavirus pandemic, the Argentine government confirmed on March 14 that they suffered a hack on the website of their official gazette (Boletin Official) based on blockchain technology, where false statements regarding the coronavirus were spread.

According to officials quoted by El Cronista, there were direct hacking attempts that failed to enter the newsletter’s system. Still, the hackers located a vulnerability that allowed fake news to be spread through edition 34,239 of the bulletin.

Such information mentioned some guidelines that were supposedly adopted for state employees amid the coronavirus emergency in the country.

Due to the security breach and subsequent high traffic, the Boletin Oficial website went offline for several hours.

Legal validity of the resolutions published on the site

The Boletin Oficial is a legally valid publication in its printed edition. Laws that have been ratified and signed by the government are published and made official through it:

„The digital edition of the Boletin Oficial acquires legal validity by virtue of Decree No. 207/2016.“

Within the resolution, the Argentine government confirmed a measure adopted by the Ministry of Education regarding the management that educational institutions that have suspected or confirmed cases of coronavirus should give it.

Blockchain Federal Argentina: the system behind Boletin Official

The blockchain system used for the Official Gazette is part of the „Blockchain Federal Argentina“ project, which is a distributed accounting technology that is used by both state agencies and private organizations.

By this means, non-modifiable information is shared through a network made up of its members, which are private and state entities.

As of press time, the resolution introduced by the security breach is still online on the Boletin Oficial website.


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False information on the Coronavirus pandemic spread across Argentina’s blockchain-based government announcement

Solving Information Leakage in Off-Exchange Crypto Trading

Solving Information Leakage in Off-Exchange Crypto Trading

What can prevent information leakage and guarantee data safety to attract institutional investors into the crypto trading

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Off-exchange liquidity venues have been widely used by institutional investors to keep large trades confidential. Although they are not perfect and can be gamed by high-frequency traders, off-exchange alternative trading systems remain popular in equities. They are starting to gain traction in the cryptocurrency sector, prompting industry participants to seek out more advanced, institutional-grade tools to most effectively trade “in the dark.” For investors concerned with order information leakage, there are platforms that are engineered to prevent this critical pain point.

Off-exchange use is on the rise

Recent data from Tabb Group shows that the share of United States equities traded off-exchange ticked up from 34.7% in December 2018 to 38.6% by April 2019. This trend is also being mirrored in Europe, where trading within off-exchanges accounted for 9.6% of all on-exchange activity for the same period. 

According to a report, this is the highest it has been since October 2017, before the Markets in Financial Instruments Directive II, or MiFID 2, implementation — introduced as a part of the EU’s January 2018 financial reforms — and a jump from April where off-exchange trading volumes accounted for 9.1% of activity.

In the burgeoning crypto sector, take-up is also increasing. Research firm Aite Group estimated that 65% of all cryptocurrency trading volume will happen in the over-the-counter market in 2019. This is a significant increase from 2016, where OTC activity only made up 32% of trades. 

Why off-exchange?

For hedge funds and institutional investors, off exchange liquidity venues have been traditionally used to make large block equity trades private until that trade is executed. This allows for optimal pricing and provides safeguards against impacting the market by signaling an intention to a trader. There are now around 30 equity off-exchange venues in operation, with some of the biggest being run by big-name banks including Swiss bank UBS Group AG and JPMorgan Chase. A growing group of off-exchange pools for crypto are emerging to meet demand from investors.

Despite their expanding popularity for both crypto and equities, there is still a trade-off that comes with trading off-exchange that investors must consider — the associated lack of transparency. 

Order information leakage is another perennial concern for institutional investors, and the use of off-exchange pools has been touted as one solution to this. However, an issue with this scenario is that off-market trading still requires investors to expose their order flow to one or more third parties, who may either intentionally or unintentionally leak the information, or worse, act upon it.

Solving the problem of information leakage

We should know by now that regulatory solutions, while sometimes necessary, often come with unintended and unexpected results. Market structure complaints do not always need regulatory interference. If possible, investors should search for solutions in the private sphere, as these can be more efficient and less costly. These innovative solutions could have the ability to turn market structure complaints and disadvantages into greater liquidity sources and build a sustainable market infrastructure for the future. 

When users send an order to a third party for matching, they can never really be sure who is looking at it, analyzing it, or talking about it. They are forced to trust the third party and take a “leap of faith” in believing that all the proper security controls are in place and working to prevent both intentional and unintentional leakage of information about the order. 

I have been involved in developing a matching engine called Cyberian that eliminates the need to trust a third party with order data. Cyberian enables institutional investors to trade cryptocurrencies such as Bitcoin (BTC), with zero information leakage at superior prices to what could be achieved on other exchanges or with OTC desks.

Cyberian uses a field of cryptography called multiparty computation, or MPC, to break up each bit of an order’s data into fragments. It then distributes the fragments among a network of nodes. These nodes then interact with each other using MPC protocols to perform order matching without revealing orders details such as quantity or limit price. This ultimately ensures that no single machine or entity is ever entrusted with an order’s data.

Conclusion

While off-exchange pools have been used in equities since the 1980s, crypto investors are now seeing their value as the sector rapidly evolves. OTC trading desks and off-exchange venues have become rather helpful for those wanting to execute large block crypto trades, but it still remains very important that institutional investors are able to use tools that have the proper controls in place to prevent information leakage and guarantee data safety.

Cyberian starts to address some of these issues and provides institutional investors a dedicated platform to place their large trades in a secure environment that not only meets their high infrastructure standards but also significantly enhances liquidity in the market.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Gerrit van Wingerden is a co-founder of Cyberian, an institutional crypto off-exchange liquidity venue. It is the world’s first trustless venue for trading blocks of digital assets. The new system is the first practical platform for matching blocks of digital assets without a single point of trust, which ultimately enables investors to buy and sell digital assets with zero information leakage and superior prices.


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What can prevent information leakage and guarantee data safety to attract institutional investors into the crypto trading

Friendly Fraud and the Failure of Chargeback Protections

Friendly Fraud and the Failure of Chargeback Protections

Cryptocurrency payments provides solutions for financial information to be more transparent and secure

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Chargebacks were originally designed to protect consumers. Today, it’s ironic that merchants often need protection against this very system put in place to protect consumers. A chargeback is the return of funds to the consumer, by the bank, to settle a debt. In the event of a filed chargeback, the bank then forcibly removes funds from the merchant’s bank account to “repay” the consumer.  

Chargebacks have long been a hindrance to e-commerce companies, sparking a rise in fraudulent behavior among consumers who attempt to defraud a company for their own monetary gain. While the payments sector grapples with bad actors, innocent consumers often get caught in the crossfire. 

Friendly fraud — also known as chargeback fraud — occurs when a customer files a chargeback instead of attempting to obtain a refund from the merchant. In some cases, such as when the goods were not received or not as described, the request for a refund is genuine. The very same cases may drive buyers to take shortcuts in their desire to avoid the archaic, tedious processes often associated with recourse. As friendly and malicious fraudsters adopt the same methods of getting a refund, attempting to distinguish between them is futile. 

Defining friendly fraud 

Friendly fraud is an honest mistake by a consumer, most commonly involving genuine forgetfulness or unknown purchases by family members. On the other hand, the desire to steal from the merchant fuels chargeback fraud with malicious intent. 

Chargebacks were introduced to protect consumers who operate in good faith. In the event that a scammy merchant has successfully convinced a buyer into paying for goods or services, chargebacks ensure that the buyer is not out of pocket should the goods arrive faulty, are counterfeit, or do not arrive at all, as is sometimes the case.

Eventually, this trust in customers was abused, and fraudsters found that they could fool the bank into issuing a chargeback on the basis that they didn’t receive goods or their card was used by someone else. In this case, the buyer receives money from the bank (which then charges the merchant) and keeps the goods. 

Financial identification: discretion and security

Chargebacks were introduced when e-commerce was an undeveloped concept. Purchases were made in traditional brick-and-mortar stores and credit cards were kept in physical purses and wallets. Unfortunately, what was once an industry that thrived off good faith now fosters fraudulent activity. Credit card information stored on numerous online accounts, apps and devices only heightens the potential for merchants to scam buyers.

The Truth in Lending Act, the foundation of the chargeback, was drafted back in the 1960s. Consider how commerce and consumer habits have been revolutionized in the last decade, not to mention the last six decades. This archaic act has failed to stymie chargeback fraud, thus proving that outdated regulation cannot be effective when the entire shopping landscape itself has changed. However, it’s not solely the legal regulations that have become outdated. 

The core issue: outdated payments systems 

Banks and outdated payments systems are the problem. In theory, the issuer of the chargeback thoroughly investigates every claim a cardholder files. In reality, banks are being overtaxed by the rapid rise in overall chargebacks, lacking resources such as time, money and modern verification systems to meet the influx of claims. This squeeze on the issuer means claims are not sufficiently reviewed and little evidence is required to submit the chargeback to a merchant’s bank. This inability to verify the legitimacy of each chargeback creates a twofold problem: While merchants are getting hit with more unnecessary fees and damage to their credibility, banks are essentially showing consumers that filing a chargeback has no repercussions. 

The issue at the root of the chargeback predicament is that people still have to expose their financial information to pay for goods and services online. This giant loophole creates more opportunities to commit fraud.

What is being done?

It’s evident that both parties need to be protected. Online payment system companies such as PayPal and Stripe have endeavored to make e-commerce safer for everyone involved. Stripe even introduced a chargeback protection service in June 2019, promising to “reimburse the disputed amount and waive dispute fees.” This benefits both the consumer and the merchant. The consumer gets their payment, and in the merchant’s case, the service especially useful in trying to stabilize cash flow. Having money removed from an account before the opportunity to dispute the fraud makes it impossible to obtain smooth cash flow. 

Technically, merchants have the right to challenge chargeback claims, however, disputing a chargeback is a complicated and time-intensive process, and the odds of a merchant succeeding in getting a chargeback reversed are very low. With the damage already done and regardless of whether the case was friendly fraud or chargeback fraud, in the eyes of the bank, the merchant is guilty until proven innocent. 

The merchant must shoulder the burden of validating the original transaction, and what’s more, there is nothing merchants can do to stop bad-acting cardholders from repeating this behavior. As financial information has been disclosed, scammers can easily hack into these centralized databases and access someone else’s card details. The exposure of this information and the storing of financial details makes it too easy to keep conning buyers. Significant security breaches have occurred time and time again — the Marriott hotel’s breach, in which hackers gained access to the personal information of an estimated 500 million customers, is just one of the scariest in recent years. 

However, a potential alternative solution does exist. With cryptocurrency payments, financial information is secure, meaning there is no risk of the buyer being frauded via identity theft, for example. The inherent immutability of blockchain technology means transactions are final for the merchant, eliminating chargeback fraud. Furthermore, the ability to instantly record information could spell the end of fraud by improving security, making hacking and faking almost impossible. The opportunity to record information on a tamper-proof ledger could eradicate issues that have burdened merchants and customers alike for years. 

There is a catch, however — neither the bank, the merchant nor the buyer can solely remedy the issue on their own. Creating an entirely new landscape for payments based on security that does not require chargebacks is the next step toward fostering mutual trust across a fragmented industry. 

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Filipe Castro holds an MBA, an MEng and a love for disruptive technologies. His experience lies in the development of software solutions, including electronic payment systems, business development and strategic development. He is inherently internationally-minded, having moved from corporate to small ventures in Scandinavia, complemented with his MBA awarded in China, Mr. Castro is now based in Switzerland as chief information officer for Utrust.


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Cryptocurrency payments provides solutions for financial information to be more transparent and secure

Bitfinex Beefs-up KYC Requirements, Asks Users for Additional Info

Bitfinex Beefs-up KYC Requirements, Asks Users for Additional Info

Bitfinex adds additional information to KYC requirements

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Cryptocurrency exchange, Bitfinex, has reportedly strengthened its know your customer (KYC) requirements, sending an email to verified users asking for more identifying information.

Additional personal data requested

According to a Dec. 27 report from the Block, the purpose of the email from Bitfinex was to enhance the exchange’s due-diligence procedures, and bring all of its client accounts “to the same level.”

Verified users were apparently asked to share information on the source of — and use of — funds, along with proof of residential address, such as a utility bill.

Constant drive to improve compliance

Bitfinex Chief Technology Officer, Paolo Ardoino, explained that the exchange is always working to improve compliance.

“That means we are in contact with our customers continuously. We may, for example, be updating various KYC documents that have expired, or clarifying the nature of certain transactions.”

Ardoino assured clients that all information is retained securely and confidentially.

Ongoing investigation by NYAG

It is uncertain whether this latest tightening of KYC procedures has been spurred by any particular event. However, the company has been subject to an ongoing investigation by the New York Attorney General since April.

Part of Bitfinex’s motion to have this investigation halted is a claim that the company has never served citizens in New York. Indeed, its terms of service state that all customers must be foreign entities


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Bitfinex adds additional information to KYC requirements

Binance Acquires Decentralized App Information Startup DappReview

Binance Acquires Decentralized App Information Startup DappReview

Decentralized app information startup DappReview was sold for an undisclosed amount to major cryptocurrency exchange Binance

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Major cryptocurrency exchange Binance acquired decentralized app (DApp) information startup DappReview, according to a press release on Dec. 2.

Per the release, DappReview’s platform provides its visitors with data analytics, user insights and information for over 3,900 DApps on 13 public blockchains.

DappReview founder Vincent Niu explained that the company also provides support for DApp developers in fundraising, product development and marketing. When asked by Cointelegraph whether he believes the acquisition by a crypto company could damage the platform’s independence, he said:

“DappReview provides accurate data analysis, users insight and market trends by aggregating the on-chain data, which is transparent to everyone. So our reports and views will not be affected by who we are. The data talks.”

Per the release, DappReview will maintain its independence in technical development and operations as well, while Binance will offer support in non-technical fields such as marketing and business development.

Niu also explained that the acquisition will provide his company with the resources to grow faster and that the firm’s next objective is to land more DApp data-integration partnerships with blockchain protocols and developers. He did not disclose the price of the acquisition.

While many hope that DApps will drive blockchain technology’s mass adoption, the market has not yet seen a decentralized application to reach mainstream use. As Cointelegraph reported at the beginning of October, a new study has shown that DApp transaction volumes and user activity slumped in the third quarter of 2019.

Binance scoops up blockchain firms

Binance has made a number of acquisitions in the blockchain and crypto space in recent months. In September, the exchange acquired JEX — a crypto-asset trading platform that offers spot and derivatives trading services — while just a few weeks ago it bought the well-known Indian crypto exchange WazirX.

The major exchange made its first public acquisition last year when it bought Trust Wallet with a reported mixture of fiat money, Binance stocks, and its native cryptocurrency Binance Coin (BNB).


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Decentralized app information startup DappReview was sold for an undisclosed amount to major cryptocurrency exchange Binance

The IRS Is Blindly Coming After Cryptocurrency Traders — Here’s Why

The IRS Is Blindly Coming After Cryptocurrency Traders — Here’s Why

The information that the IRS is receiving from cryptocurrency exchanges does not reflect your capital gains and losses whatsoever. This is problematic because these capital gains and losses are what you actually pay taxes on, not gross transaction amounts

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Over the past month, we have seen the IRS, the tax collecting agency of the United States, send out more than 10,000 warning and action letters to suspected cryptocurrency holders and traders who may have misreported digital assets on their tax returns. Letters like the 6174-A, 6173 and CP2000 have appeared in the mailboxes of cryptocurrency traders throughout the country, and the crypto tax software company that I run has seen an influx of frantic customers coming to us for tax help out of fear of penalties.

The problem here is that the IRS doesn’t have all of the necessary information. In fact, not only does it not have all the information, but the information that it does have on the cryptocurrency holders that it is sending letters to is extremely misleading. This information, which was supplied to the IRS by cryptocurrency exchanges like Coinbase, is causing the agency to blindly and oftentimes inaccurately come after cryptocurrency traders.

Related: Internal Revenue Service Sends New Round of Letters to Crypto Holders 

Allow me to break this down further.

How is cryptocurrency taxed in the U.S.?

In many countries around the world — the U.S. included — cryptocurrencies like Bitcoin are treated as property from a tax perspective, rather than as a currency. Just like other forms of property — stocks, bonds, real-estate — you incur capital gains and capital losses that need to be reported on your tax return whenever you sell, trade or otherwise dispose of your cryptocurrency.

Related: How Crypto Is Taxes in the US: A Taxpayer’s Dilemma 

Pretty straightforward: If you make a bunch of money investing in Bitcoin (BTC), you have a capital gain and a tax liability that needs to be reported. If you lose a bunch of money, you have a capital loss, which will actually save you money on your tax bill — though it still needs to be reported.

It doesn’t come as a huge surprise that many enthusiasts have not been paying taxes on their cryptocurrency activity. Because of this, it actually makes a lot of sense why the IRS has started carrying out these enforcement campaigns. However, the agency is using information that is extremely misleading, and it is leading to problems. This misleading information starts with Form 1099-K.

Breaking down Form 1099-K

Cryptocurrency exchanges like Coinbase, Gemini and others issue 1099-K’s to users who meet certain thresholds of transaction volume on their platforms. The IRS states on its website that the 1099-K is an information return used to report third-party network transactions to improve voluntary tax compliance.

In plain English, the 1099-K is used to report your gross transactions on a third-party network — in this case, a cryptocurrency exchange. This means that all of your transactions, buys, sells, transfers, etc. are summed up and reported on a 1099-K. If you meet certain thresholds — gross payments that exceed $20,000 and more than 200 such transactions — you and the IRS are both sent a copy of this 1099-K from the cryptocurrency exchange. The IRS is using these documents to monitor who is and isn’t paying taxes correctly.

These “gross transaction” reports can quickly get extremely large for high volume cryptocurrency traders. Remember, every transaction you made  is being summed together on this form. I purchased $1,000 worth of Bitcoin, and then traded that Bitcoin in and out for Ether (ETH) five times, and my gross proceeds are now over $6,000 — even though I only ever “put in” $1,000 cash! This is because all “buy” transactions are added together to report gross proceeds, and in this case, I technically had six different buy transactions and six different “sell” transactions — a Bitcoin trade into ETH is considered both a buy of ETH and a sell of BTC. 

You can see how this number can become extremely large for a high volume trader. At CryptoTrader.Tax, we’ve seen 1099-K’s from customers in the millions of dollars range when the trader only ever had a few thousand dollars worth of crypto.

Why this is so problematic

1099-K’s are reporting gross transaction amounts and are being sent to the government. Yet, the numbers reported are completely irrelevant when it comes to tax reporting, as you are only actually taxed on your capital gains and losses.

Again as an example, say you purchased $10,000 worth of Bitcoin in April and then sold it two months later for $9,500. You have a $500 capital loss that would be deducted from your taxable income. However, reported on 1099-K, nothing is said of your net loss; the form only tells the government that you have $19,500 of gross cryptocurrency transactions. 

Ultimately, 1099-K is not a form that should be used for tax reporting purposes, yet the IRS is relying on it for enforcement. Many people often mistake the 1099-K that they receive from cryptocurrency exchanges with the typical 1099-B that they might receive from their stock broker or other investment platform outside of crypto. The 1099-B is the correct form that reports all necessary information required to calculate and accurately report capital gains and losses — including cost basis and fair market value of your investments. It’s very easy to determine your total capital gain and loss with this form, contrary to 1099-K.

The fact that the IRS is relying on 1099-K to issue action letters is problematic. Unfortunately, cryptocurrency exchanges do not have the ability to give you an accurate Form 1099-B.

Related: IRS Expands Penalties: Which Tax Mistakes Are Better Not to Commit 

Why cryptocurrency exchanges can’t provide tax reports like a stock brokerage does

Because cryptocurrency users are constantly transferring crypto into and out of their exchanges, the exchange itself has no way of knowing how, when, where or at what cost (cost basis) you originally acquired your cryptocurrencies. It only sees that they appear in your wallet on their platform. 

The second you transfer crypto into or out of an exchange, that exchange loses the ability to give you an accurate report detailing the cost basis and fair market value of your cryptocurrencies, both of which are mandatory components for tax reporting. In other words, cryptocurrency exchanges do not have the ability to provide you with the necessary information to calculate your capital gains and losses. This also means that they also don’t have the ability to provide you with a 1099-B.

Coinbase itself explains to its users in its FAQs that their generated tax reports won’t be accurate if any of the following scenarios took place:

  • You bought or sold digital assets on another exchange.
  • You sent or received digital assets from a non-Coinbase wallet.
  • You sent or received digital assets from another exchange, including Coinbase Pro.
  • You stored digital assets on an external storage device.
  • You participated in an initial coin offering.
  • You previously used a method other than ”first in, first out“ to determine your gains/losses on digital asset investments

These scenarios affect millions of users.

In conclusion

The information that the IRS is receiving from cryptocurrency exchanges does not reflect your capital gains and losses whatsoever. This is problematic because these capital gains and losses are what you actually pay taxes on, not gross transaction amounts.

So, if you received a warning letter from the IRS, don’t panic. As long as you have been properly filing your cryptocurrency gains and losses on your taxes, you should be fine. The absurdly high numbers that you are seeing on these letters are often times irrelevant. Nonetheless, it is a good idea to consult a tax professional who is familiar with cryptocurrency for further help and clarification — especially if it’s an action letter.

The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph. 

David Kemmerer is the co-founder and CEO of CryptoTrader.Tax, a tax reporting platform for cryptocurrency investors.


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The information that the IRS is receiving from cryptocurrency exchanges does not reflect your capital gains and losses whatsoever. This is problematic because these capital gains and losses are what you actually pay taxes on, not gross transaction amounts

Head of Facebook’s Libra Distances it from BTC: we’ll Share Information with Authorities

Head of Facebook’s Libra Distances it from BTC: we’ll Share Information with Authorities

Libra Project will distance itself from Bitcoin and will share information with authorities, said Facebook’s head of blockchain David Marcus

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Head of blockchain at social media giant Facebook David Marcus said that the Libra Project will distance itself from bitcoin (BTC) and will share information with authorities, Cointelegraph Brazil reports on June 18.

Per the report, Marcus made his remarks during an interview with Brazilian newspaper Estado de São Paulo, which was published today. During the interview, he said that Libra’s data will be shared with authorities for crime prevention and to ensure compliance with regulation.

The article also claims that Facebook does initially not plan to profit off of Libra transaction fees and intends to keep the costs associated with transactions as low as possible. Still, the company reserves the right to change those rules.

Facebook also intends to provide financial services through the Calibra wallet. Kevin Weill, vice president of product, is also quoted in the interview, stating that the company will definitely offer credit services. Marcus does not rule out that traditional banks will join the project, he also commented:

“Even if we offer similar services in the future it will still be for the better, since there will be more competition in the finance industry.”

The social media giant released the whitepaper of its Libra blockchain earlier today.

As Cointelegraph reported earlier today, Binance Research, the research arm of major cryptocurrency exchange Binance, claims that Facebook’s Libra stablecoin could spark additional cryptocurrency volume.


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Libra Project will distance itself from Bitcoin and will share information with authorities, said Facebook’s head of blockchain David Marcus

US Marshals Service Issues Information Request on Management of Forfeited Crypto Assets

US Marshals Service Issues Information Request on Management of Forfeited Crypto Assets

The United States Marshals Service has published an information request for the procedures of management and disposal of forfeited virtual currency

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United States federal law enforcement agency, the U.S. Marshals Service (USMS), is looking to set up an agent for managing confiscated cryptocurrency, according to public documents released on March 5.

The USMS has recently published two draft documents including a Request for Information (RFI) for legal procedures of the management and disposal of forfeited crypto assets.

As a key component of the department’s Asset Forfeiture Program (AFP) operating within the U.S. Department of Justice (DoJ), the USMS intends to assign an agent or contractor that will manage and dispose of seized or forfeited virtual currency. By initiating the RFI, the USMS expects to improve its current custodial operations by maintaining a complete and accurate accounting of the USMS’ virtual currency inventory.

In the first document, the Performance Work Statement (PWS), the USMS describes the full range of forfeited virtual currency management and disposal services, including general procedures and responsibilities of the contractor.

According to the document, the contractor must ensure the accuracy and security of all virtual currency transactions, including the direct exchange of virtual currencies into U.S. dollars, the exchange into a more liquid form of virtual currency, a return to the owner and others.

The PWS contract includes major activities associated with the management of virtual currencies, including accounting, customer management, audit compliance, managing blockchain forks, wallet creation, transformation of token assets into coin assets and others.

In the second document, the Quality Assurance Surveillance Plan (QASP), the USMS establishes an evaluation system for the performance of the contractor. The QASP describes major authorities such as Contracting Officer and Contracting Officer’s Representative that are responsible for performance measurement and effective evaluation of the contractor’s compliance.

The USMS noted that the recently issued RFI is provided solely for information and planning purposes and does not represent either a Request for Proposal (RFP) or a promise to issue an RFP in the future.

Last year, the USMS announced a bid auction for approximately 660 confiscated Bitcoins (BTC), with the auction participants required to deposit $200,000 in order to take part.


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The United States Marshals Service has published an information request for the procedures of management and disposal of forfeited virtual currency

FBI Solicits Information From Bitconnect Investors With Voluntary Questionnaire

FBI Solicits Information From Bitconnect Investors With Voluntary Questionnaire

The FBI wants to identify alleged victims of the Bitconnect alleged ponzi scheme via a questionnaire

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The United States Federal Bureau of Investigation (FBI) is seeking to contact investors in alleged ponzi scheme Bitconnect (BCC) that collapsed in January last year, a news statement confirmed on Feb. 20.

As part of ongoing investigations into the activities of the well-known but shadowy scheme, the Cleveland branch of the U.S. law enforcement agency appealed to ex-investors to give information about their interaction with Bitconnect.

A dedicated questionnaire is already available online, Special Agent Vicki D. Anderson explaining that responses would assist investigators in identifying those affected by monetary loss.

“The FBI is seeking potential victims who invested in the cryptocurrency Bitconnect coin (BCC), which was first released through an initial coin offering orchestrated by Bitconnect in November 2016,” she explained in the statement, adding:

“Your responses are voluntary and would be useful in the federal assessment of this matter and to identify you as a BCC investor and/or potential victim.”

The questionnaire requires the respondent to provide information such as how they first heard of Bitconnect, how much they invested and their access username.

As Cointelegraph reported, Bitconnect gained an almost mythical status among the plethora of initial coin offerings (ICO) which operated until the market crashed last year. Organizers’ lavish publicity events included bizarre entertainment for attendees, most notable of which were appearances by spokesperson Carlos Matos that subsequently went viral.

At its peak, BCC had a market cap of $2.5 billion, but the coin no longer trades or lists on exchanges. In January, Australian authorities imposed a travel ban on a one-time promoter of Bitconnect.


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The FBI wants to identify alleged victims of the Bitconnect alleged ponzi scheme via a questionnaire

Independent Research Claims to Identify Five QuadrigaCX Cold Wallets

Independent Research Claims to Identify Five QuadrigaCX Cold Wallets

New information on cold wallets begins to clear the air around the QuadrigaCX controversy

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An internet analyst has claimed to have delineated four Bitcoin addresses that belonged to defunct Canadian exchange QuadrigaCX, publishing their findings on Reddit on Feb. 13.

The post, by a user known on Reddit as u/dekoze, indicates five addresses allegedly associated with the exchange, noting that the number is just a fraction of the total number of associated wallets. Transactions sent to the addresses roughly equal the amount of Bitcoin Quadriga previously reportedly sent to locked cold wallets by mistake.

“Notably, every address was inactive since April 2018 and the majority of their received BTC was either directly from the QCX hot wallet or a wallet 1 transfer removed from the hot wallet,” u/dekoze commented, continuing:

“With all this information this we can confirm: These 5 addresses are a portion of the QCX cold wallet addresses.”

QuadrigaCX has been the center of a debacle since its CEO Gerald Cotten died in December. Leaving no indication of the identity of the exchange’s cold wallets or how to access them, Cotten inadvertently left users out of pocket by almost $200 million.

Multiple theories have since appeared surrounding the events, including that Quadriga never had the funds it claimed to and that an unknown party in fact does have access to the cold wallets.

If the latest research is accurate, it will shed new light on the activity involving Quadriga’s wallets.

“At this point, due to plausible deniability and lack of transparency, we have reached the extent of what we (non-law enforcement) can 100% know for now,” u/dekoze summarized:

“With minimal understanding of the BTC blockchain though, there are some big leads we can follow but can only speculate on.”

A court hearing today, Feb. 14, is set to decide which law firms can represent the around 115,000 clients who lost money.


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New information on cold wallets begins to clear the air around the QuadrigaCX controversy

Israel’s Central Bank Issues Request for Information on DLT

Israel’s Central Bank Issues Request for Information on DLT

The Bank of Israel has published a formal request for information on distributed ledger technology

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A team that includes representatives from the Bank of Israel has issued a formal request for information about Distributed Ledger Technology (DLT), published on its website Dec. 18.

The request — the goal of which is, as per the title, the “Regulatory Coordination of Virtual Assets”— states that “the regulators of the Israeli financial system believe that there is room to renew and strengthen cooperation and coordination among all regulators and the public” regarding DLT.

Besides the country’s central bank, the team reportedly includes representatives from the country’s Securities Authority, the Ministries of Finance and Justice, the Tax Authority, the Israel Money Laundering and Terror Financing Prohibition Authority and various other local regulatory bodies.

The document asks for information pertaining to barriers to the development of the local DLT industry. The text inquires explicitly about problems encountered by local DLT companies, fundraisers, investors and consumers dealing with virtual assets as examples.

Moreover, the request inquires about the risks inherent in the use of virtual assets and the opportunities of DLT in the finance industry. Lastly, the statement also asks how DLT can help address issues regarding Anti-Money Laundering (AML) and terrorism financing.

As per the statement, interested parties are invited to submit relevant information until Dec. 31, 2018.

As Cointelegraph reported at the beginning of November, an Israeli study group exploring digital currency options has recommended that the country’s central bank not issue its own cryptocurrency.

At the beginning of December, Ehud Barak, a former Israeli Prime Minister, compared digital currencies to Ponzi schemes. He reportedly stated that “he would never invest” in crypto as “Bitcoin and cryptocurrencies [are] a Ponzi scheme.”


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The Bank of Israel has published a formal request for information on distributed ledger technology

New Exchange to Offer Customizable Dashboards — Giving Traders the Information They Want

New Exchange to Offer Customizable Dashboards — Giving Traders the Information They Want

Fed up with having to trawl through several pages on exchanges before you find the vital statistics you need? This exchange says it has the answer #SPONSORED

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A new exchange says it has the goal of becoming “the most professional, global and secure marketplace for digital assets” — utilizing state-of-the-art technology that it claims can deliver a processing capacity of 1.5 million order matches per second.

ProBit says its platform is “fast, robust and reliable” — helping to give its users an upper hand while trading. The company says security is a priority, and this is why it promises to store “95 percent or more of digital assets in a cold wallet” — protecting users against security breaches and theft. Hardware security keys are also being made available to traders, which are “impossible for hackers to crack,” yet convenient to use.

According to the company, many traders end up using multiple exchanges because they cannot find the trading pairs they want — or because the user interfaces are too difficult to understand. ProBit aims to remedy this problem through a modular dashboard — meaning that the layout can be personalized around the needs and interests of a trader. Instead of pushing the same information to every user, Probit appreciates different crypto enthusiasts are interested in different things, and wants to put the power in their hands.

Through ProBit, “a wide array of the most trusted coins and tokens on the market” can be traded — and the company says that more than 150 cryptocurrencies will be available. This is complemented by hundreds of trading pairs. Five of them — Bitcoin, Ethereum, USDT, EOS and the native ProBit token among them — serve as “base currencies.”

Customizable user interface for traders of all levels

According to ProBit, many of the exchanges out there at the moment are failing to hit the sweet spot when it comes to attracting users from all backgrounds. It says that, as a rule, most exchanges are geared toward inexperienced traders or experts. Although some platforms do enable traders to toggle between basic and advanced modes, the ProBit says this just means that every user is not getting what they fully need.

This is the rationale behind the fully customizable interface. Every component can be moved and resized as per their priorities — enabling traders to benefit from a service that acts as the left hand to their right hand. This personalization even extends to the colors used on tickers, giving users the chance to find a layout tailor made for them.

Of course, using a crypto exchange for the first time can be a daunting experience — and this is why ProBit offers an array of preset layouts for new users. This serves as a starting point which enables traders to figure out how they want to lay out the vast amounts of information that the company exchange has to provide.

ProBit says that its platform will be active 24/7, and customer support will be available in multiple languages — cementing its goal of becoming a global exchange.

A global player

The company is clear that it wants to be more than a copycat exchange that seems to offer identical features to the platforms already out there. ProBit says this ambition is going to be realized thanks to its team of executives. While CEO Hyunsu Do worked as an accelerator for fintech and blockchain-based companies, CTO Steve Woo amassed 25 years of experience in the software industry thanks to his tenure as CEO of Linux International.

The main sale of ProBit tokens — known as PROB — is taking place on Dec. 3, 2018 and will last for only one day. The company stresses that these tokens are never going to be used for marketing or bounty services. Moreover, its team adds that they are not going to charge listing fees for projects to be traded on ProBit for three reasons: to protect users, because it amounts to a conflict of interest and because it enables them to be selective.

Ronald Chan, the director of partnership for ProBit, shared that projects from around the world have submitted themselves for listing on ProBit because of the co-marketing campaign that ProBit and crypto projects will conduct together. He added that this win-win partnership raises the visibility of both parties.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.


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Fed up with having to trawl through several pages on exchanges before you find the vital statistics you need? This exchange says it has the answer #SPONSORED