All posts in “cryptocurrency”

The sad story of an alleged SIM swapper who boosted millions

Get that SIM.
Get that SIM.

Image: Thomas Trutschel / getty

You probably shouldn’t feel sorry for Nicholas Truglia. It’s just that his story is so pathetic.

The 21-year old Manhattan resident was arrested last November and extradited to California in December. There, he’d face 21 felony counts relating to accusations of SIM swapping his way to a million dollars worth of stolen cryptocurrency. While Truglia’s fate remains unclear, details of his life leading up to the arrest have begun to emerge thanks to a lawsuit filled by a separate alleged victim, and oh man is it a wild ride. 

As Krebs on Security reports, a lawsuit filed by Michael Terpin — a cryptocurrency investor and self-described “thought leader” — against Truglia claims he lost over $23 million after Truglia SIM swapped him and drained his crypto accounts in January of 2018. That document, and a supporting affidavit by one of Truglia’s former friends, tells the story of a cash-flush young man who saw himself as untouchable. 

And, perhaps unsurprisingly, they also paint Truglia as kind of an asshole. 

The now-deleted Twitter profile pic of @erupts, the account allegedly once belonging to Truglia.

The now-deleted Twitter profile pic of @erupts, the account allegedly once belonging to Truglia.

Image: twitter / waybackmachine

“Nick likened himself to Robin Hood who robs from the rich but did not give to the poor,” explained Chris David, former associate of Truglia’s, in the aforementioned affidavit. 

Instead, the documents paint a picture of someone who delighted in giving to himself — in the form of a Rolex, a $6,000-a-month apartment, and a $100,000 stack of cash he kept on his credenza. But that clearly wasn’t enough for him.

According to David, Truglia operated the now-suspended Twitter account @erupts, where he lamented that his wealth didn’t bring him friends, and even bragged about SIM swapping his dad.  

Exhibit D

Image: screenshot / superior court of california

“Stole 24 million but still can’t keep a friend,” reads one alleged Truglia tweet saved by David and included in his supporting affidavit. 

Ouch.

Image: twitter / waybackmachine

David’s affidavit is filled with some other gems, as well. 

“Nick arrogantly proclaims that he will never [be] caught hacking/stealing because he is so good at it—literally, ‘how are they going to prove that my story [his defense] wrong?,'” he wrote. “Nick also boasted: ‘Nobody can get me in trouble. Nobody can put me in jail. I would bet my life on it, actually.'”

That is a watch.

Image: twitter / waybackmachine

In addition to supposedly boasting about how he would never be caught, David says Truglia took pleasure in life’s small things: Like, for example, skipping out on a restaurant check and repeatedly beating his dog. 

Sounds fun.

Image: screenshot / SUPERIOR COURT OF CALIFORNIA

Obviously, Truglia was eventually arrested. According to Krebs On Security, his court date is set for April 10.

Terpin, for his part, wants his money back. “I have brought this lawsuit as part my ongoing effort to recover my losses caused by the perpetrators of the January 7, 2018 theft,” he explained to the court

Which, hey, why not. As this lawsuit makes clear, stranger things have happened. 

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Ethereum is about to get a big upgrade. Here’s what you need to know.

Ethereum, the third-largest cryptocurrency by market cap and the most popular platform for decentralized applications (dApps), is getting an upgrade on (roughly) Jan. 16. 

The upgrade is called Constantinople and it makes the Ethereum network a bit more efficient, paving the way for bigger changes further ahead. It also brings some important changes for miners on the network. 

Here’s an overview of what, exactly, is happening, and the steps owners of ether should undertake ahead of the fork. 

The answer to the second question is really easy: There’s no need to do anything. The upcoming upgrade, while technically a fork, will very likely be non-contentious, meaning there’s no disagreement on whether it should happen. This means Ethereum won’t split into two separate coins next Wednesday. If everything goes well — and chances are good that it will — your ether holdings will be exactly the same before and after the fork, regardless of whether your ether is located on a private wallet or an exchange. 

And no, ether holders will not be getting a new coin; if you see info about it anywhere, it’s either a scam or a mostly-irrelevant project that’s just trying to get some attention out of the confusion that surrounds every cryptocurrency fork (which is why I’m primarily calling Constantinople an upgrade and not a fork). 

Ethereum node operators and miners will have to update their software ahead of the upgrade; the links can be found here

Note that the January 16th date for the upgrade is approximate. The upgrade should happen when block 7,080,000 on the Ethereum blockchain is mined, which is currently approximately Wednesday, Jan, 16, 8pm UTC, but the exact time will shift a little as new blocks aren’t always found in the same amount of time. 

Paving the way for a faster future

With that out of the way, there are still a few things you should know about this upgrade. 

Constantinople consists of five Ethereum Improvement Proposals (EIPs), which are documents explaining a new feature or change in Ethereum’s code. Explaining them in detail might be a bit too technical for most users, but here’s an overview of the most important changes they bring.

Four of the EIPs — EIP 145, 1014, 1052 and 1283 — describe various technical improvements, which make Ethereum a bit more efficient, cheaper to use and pave the way for future upgrades. In short, they’re nice, they’re needed, but they’re not something the vast majority of users will notice in day-to-day usage. 

EIP 1014 is worth singling out as it makes it possible to interact with Ethereum addresses that haven’t yet been created. This is important as it will be used for so-called state channels, which will (hopefully) be an important scaling solution for Ethereum, allowing certain transactions to happen on a separate blockchain. Remember how Cryptokittes ground down Ethereum to a halt? Well, thanks to state channels, games like Cryptokitties will be able to live on Ethereum without slowing it down. 

From PoW to PoS

The fifth EIP, 1234, brings two major (but closely related) changes. One reduces the reward for mining Ethereum, and the other delays the so-called “difficulty bomb,” a mechanism that forces Ethereum to upgrade to a completely different mode of operation called proof-of-stake (PoS). 

Ethereum, like Bitcoin, is a blockchain-based platform with a proof-of-work consensus mechanism. That means that blocks with all the transactions on the networks are confirmed by miners, which employ computing power to solve a math puzzle with ever-increasing complexity. This makes it quite hard (though not impossible, as seen from the recent attack on Ethereum Classic) to alter Ethereum’s blockchain, but it’s also wasting a tremendous amount of energy. 

Right now, Ethereum mining is being done with machines similar to this one, which are pretty big energy wasters. New tech called proof-of-stake will remove mining machines from the equation.

Right now, Ethereum mining is being done with machines similar to this one, which are pretty big energy wasters. New tech called proof-of-stake will remove mining machines from the equation.

Unlike Bitcoin, Ethereum’s plan from the get go was to transition to a different consensus mechanism called proof-of-stake. With PoS, there’s not mining in the traditional sense; instead, owners of ether coins can “stake” them in order to participate in a sort of a lottery, in which winners “create” the next block. And this switch isn’t just some future fable; it will happen in an upgrade called Casper that’s actively being worked on and is slated to kick in sometime in 2019 (Casper, you guessed it, will be a much more significant upgrade than Constantinople). 

Switching from PoW to PoS isn’t simple. This is partly due to the big mining ecosystem that has grown around popular cryptocurrencies such as Ethereum, and partly because all the kinks of how PoS should work haven’t exactly been ironed yet. 

But there’s an additional problem. Ethereum has something called “difficulty bomb” built into its ruleset. It’s a timer that progressively makes miners’ work harder. This reduces the influx of new ether, and also makes mining ETH less lucrative. It’s a bit of a stick that chases away the “old” miners and ushers in the new mentality of staking coins to “mine” new blocks. 

This is where EIP 1234 comes into play. Since Casper isn’t ready yet, this change will delay the difficulty bomb by approximately 12 months. But, since everyone knew about the difficulty bomb timer for a while, its effects have been calculated into miner profits. So EIP 1234 makes another change: It reduces the block mining rewards from 3 ETH per block to 2 ETH per block. 

So, after Jan 16, it will take roughly the same time for an Ethereum miner to mine a block, but their reward for doing so will be reduced from 3 ETH to 2 ETH. It’s not very complicated, but it will have long-lasting consequences on Ethereum. 

What about the price?

The price of ether has been extremely volatile lately.

The price of ether has been extremely volatile lately.

Again, EIP 1234 does not change much for most Ethereum users, but it is quite a big change for people who mine ether. Some may switch to mining other cryptocurrencies, but because of the way Ethereum was designed, mining will still stay profitable for most. 

Of course, one question that many ether owners will be asking themselves is: What happens to the price of ether after this change? 

This is hard to answer. Ethereum has been extremely volatile in the past two years, with the price dropping from a high of nearly $1,400 in January 2018 to a low of $85 in December — and all that happened without a significant network upgrade. In other words, if price is jumping up and down like crazy (the price went down more than 20% in the last couple of days, for example) for little or no reason, trying to price in the effects of Constantinople is folly. 

Still, there are reasons for cautious optimism. Reducing the influx of ether should, theoretically, drive the prices up, though the effect will likely be mild. Furthermore, if the upgrade goes as planned, it reduces uncertainty, which is typically good for the price. 

Again, the TLDR on this one is simple: If you own ETH, there’s no need to do anything ahead, during or after the Constantinople upgrade. Hopefully, the upgrade will go as planned and pave the way for Casper later this year. 

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH. 

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NYSE operator’s crypto project Bakkt brings in $182M

The Intercontinental Exchange’s (ICE) cryptocurrency project Bakkt celebrated New Year’s Eve with the announcement of a $182.5 million equity round from a slew of notable institutional investors. ICE, the operator of several global exchanges, including the New York Stock Exchange, established Bakkt to build a trading platform that enables consumers and institutions to buy, sell, store and spend digital assets.

This is Bakkt’s first institutional funding round; it was not a token sale. Participating in the round are Horizons Ventures, Microsoft’s venture capital arm (M12), Pantera Capital, Naspers’ fintech arm (PayU), Protocol Ventures, Boston Consulting Group, CMT Digital, Eagle Seven, Galaxy Digital, Goldfinch Partners and more.

Bakkt is currently seeking regulatory approval to launch a one-day physically delivered Bitcoin futures contract along with physical warehousing. The startup initially planned for a November 2018 launch, but confirmed this morning an earlier CoinDesk report that it was delaying the launch to “early 2019” as it awaits permission from the Commodity Futures Trading Commission. Along with the funding, crypto news blog The Block Crypto also reports Bakkt has hired Balaji Devarasetty, a former vice president at Vantiv, as its head technology.

ICE’s crypto project was first announced in August and is led by chief executive officer Kelly Loeffler, ICE’s long-time chief communications and marketing officer. Bakkt quickly inked partnerships with Microsoft, which provides cloud infrastructure to the service, and Starbucks, to develop “practical, trusted and regulated applications for consumers to convert their digital assets into U.S. dollars for use at Starbucks,” Starbucks vice president of payments Maria Smith said in a statement at the time.

Many Bitcoin startups floundered in 2018, despite record amounts of venture capital invested in the industry. This was as a result of failed initial coin offerings, an inability to scale following periods of rapid growth and the falling price of Bitcoin. Still, VCs remained bullish on Bitcoin and blockchain technology in 2018, funneling a total of $2.2 billion in U.S.-based crypto projects — a nearly 4x increase year-over-year. Around the globe, investment hit a high of $4.6 billion — a more than 4x increase from last year, according to PitchBook.

“Notably, 2018 was the most active year for crypto in its brief ten-year history,” Loeffler wrote. “This was evidenced by rising investment in distributed ledger technology and digital assets, as well as by blockchain network metrics such as daily bitcoin transaction value and active addresses. Yet, these milestones tend to be overshadowed by the more narrow focus on bitcoin’s price, which has been seen by some, as a proxy for the potential of the technology.”

Today, the price of Bitcoin is hovering around $3,700 one year after a historic run valued the cryptocurrency at roughly $20,000. The crash caused many to dismiss Bitcoin and its underlying technology, while others remained committed to the tech and its potential for complete financial disruption. A project like Bakkt, created in-house at a respected financial institution with support from noteworthy businesses, is a logical bet for crypto and traditional private investors alike.

“The path to developing new markets is rarely linear: progress tends to modulate between innovation, dismissal, reinvention, and, finally, acceptance,” Loeffler added. “Each step, whether part of discovery or adversity, ultimately strengthens the product. Twenty years ago, it was controversial to suggest that commodities or bonds could trade electronically on a screen, and many steps were required for that evolution to play out.”

Layer1 wants to thrive in the age of the crypto crash

A year ago, crypto was reaching ever new highs, and I was talking about whether ICOs would supplant the VC funding round and warning about Kim Jong Un’s crypto trading operations.

And then the world turned upside down.

Crypto prices are near rock bottom prices, with Bitcoin hanging around $4,000 and Ethereum around $113, down from their highs earlier this year of around $16,600 and $1,400 respectively.

While that has put a dampener on the enthusiasm of a lot of cryptocurrency retail investors, the bigger question is how do institutional players work through this market? What’s the strategy for finding value in this technology sector long-term?

I chatted with Alexander Liegl, who may just have at least part of the answer. He’s the founder of Layer1, which announced a $2.1 million fundraise this week from Peter Thiel, Digital Currency Group, and Jeffrey Tarrant.

Liegl saw a huge challenge in the blockchain and cryptocurrency spaces: too many good ideas and not enough developers working on product development work. So he decided to create an “activist fund for cryptocurrencies” that would “take concentrated bets on protocols that we think have a need in this world.” Layer1 then supplies developers and other experts to provide “infrastructure and support,” he explained. “An operating entity like us can have a lot of influence in moving the needle.” He describes Layer1 as “a combination of Polychain and Blockstreet” and “the Rocket Internet of crypto.”

That might sound vaguely similar to ConsenSys, the loosely-coupled group of startups and infrastructure engineers trying to build out Ethereum which has run into very hard times recently. Unlike ConsenSys, which was founded by Ethereum co-founder Joe Lubin and is directly focused on that ecosystem, Layer1 isn’t wedded to one blockchain or ecosystem, and instead selects a single project at a time through a mix of financial analysis and thesis development.

With capital in the bank, Layer1 has backed Grin as its first cryptocurrency. Grin is designed to be a completely private and censorship-resistant transaction medium, and Liegl says that “conceptually it really reconciles with our view in the space.” He particularly liked that Grin has an anonymous founder like Bitcoin, since no founder controls the governance of the project. Grin is intending to publicly launch in mid-January.

I asked Liegl how he was responding to the crypto crunch this year in the markets, and he considered it far more of an opportunity than a detriment to his work. “I’m really pumped about all of this,” he explained. “a lot of the bad actors have to be flushed out.” He noted that the low of the bear market may not be reached yet, but that Layer1 was in a good position to take advantage of the timing. “We raised the newest dollars, so we are not suffering from any of these ICO-induced problems,” he said.

Liegl, who graduated from Stanford in 2015 and briefly worked at Stanford’s endowment, has certainly seen the vagaries of the cryptocurrency markets. He learned about Bitcoin during its first popular run-up in 2013, even convincing his parents to invest in the budding project.

Now, he has his eyes set on Grin, and then additional projects. He thinks Layer1 will invest in a new project roughly every 6-9 months, which will accelerate over time with additional capital.

While these “platform” models have struggled a bit in the venture world, I think it’s reasonable that blockchain projects, which often suffer from a lack of attention from developers and end uses, could use a strong engineering and popularization boost. Layer1 isn’t the first in the blockchain world to take this approach nor I am sure will it be the last, but it might be just the ticket forward for a world that has struggled to pay its employees and bills in a crash.

Spot is a cryptocurrency app to control all your wallets and exchange accounts

Meet Spot, a beautifully-designed mobile app to control your cryptocurrencies. Spot looks like a portfolio tracking app. But the company has built a strong foundation to add more features in the coming months. Spot wants to be your unique gateway to the world of cryptocurrencies.

“Spot’s vision isn’t to build a portfolio tracker — we went a bit overboard with this feature,” co-founder and CEO Edouard Steegmann told me. “Eventually, we want to become the app to manage all your cryptos, a sort of Revolut but with a crypto DNA.”

When you first install the app, you can connect it to your existing wallets by adding public addresses. Even if you store your tokens on a hardware wallet, Spot can read the public details of your wallet to show them in the app.

“We have our own nodes on Ethereum, Bitcoin, Litecoin, Stellar and others to recover the amount on your wallet,” Steegmann said. Data is also cross-checked with third-party services to make sure that everything is fine.

Spot also lets you connect to an exchange account using API keys. Right now, the app supports Binance, Kraken, Bitfinex and Poloniex, but the company already plans to add more exchanges.

The app then gives you a detailed overview of your holdings across all services and wallets. You can see detailed charts, discover which token is performing better than the rest. It’s also one of the most well-designed mobile app I’ve seen this year — animations and interactions are gorgeous.

But Spot doesn’t rely on an API to get pricing information for each token. “We’ve rebuilt CoinMarketCap from the ground up, and we’re one of few companies that have done it,” Steegmann said. The company stores pricing information for dozens of tokens across 150 exchanges. That’s a lot of pairings.

If you tap on the Spot logo at the top of the app, you can see the maximum value of your portfolio if you cash out on exchanges with the highest prices for your tokens. The company makes sure that there’s enough volume to show you coherent prices.

Spot thinks that controlling your own data is too important to rely on API calls. When you have your own data, you don’t have any API rate limits, you don’t have a major dependency and you can scale more calmly.

Up next, you’ll be able to trade directly in the app. The company isn’t going to build its own exchange, but you can expect to buy and sell tokens on a third-party exchange without having to visit the website.

“We think that many things will be tokenized and that there’s no user-friendly interface to transfer, receive, buy and sell,” Steegmann said.

The company raised a $1.2 million round (€1.056 million to be exact) from Kima Ventures and business angels, including Eric Larchevêque and Thomas France from Ledger, Jean-Daniel Guyot, Thibaud Elzière, Eduardo Ronzano, Nicolas Steegmann, Sébastien Lucas and Nicolas Debock.

Disclosure: I own small amounts of various cryptocurrencies.