BLOCKCHAIN BATTLES

DRUG GANGS POUR ACROSS SOUTHERN BORDER WHILE U.S. GOES AFTER BINANCE. The stock market sinking 600 points early last week off horrible inflation numbers and the Colonial Pipeline fiasco needed something to turn it around.

Cue a crackdown on Binance specifically and decentralized cryptos more generally. U.S authorities announced an investigation into supposed rampant drug-related and other criminal money laundering on the exchange. 

Together with Elon Musk’s odd sudden reversal, selling off BTC citing environmental concerns, and the Colonial ransomware attackers, who demanded payment in BTC, there was easily enough news to scare investment off cryptos. By Friday, the Dow had recovered 360 points and stood at 34,382. 

Still a loser on the week, but the wild swings in Bitcoin, Ethereum, and other top market-cap cryptos may mean investors are heading back to stocks rather than cryptos to try to stay ahead of the gathering inflation monster.

Of course, if the Feds were serious about drug money laundering, they might be doing something about the exploding fentanyl peddlers and south-of-the-border cartels creating drug-fueled mayhem from Texas to Arizona and New Mexico, to Cali, and up through the American heartland, to the Virginias, and on to formerly quaint New England towns.

Cartels have so pervasively sunk tentacles everywhere, pipelining heroin, cocaine, and exponentially more lethal designer drugs, that it’s banally accepted as an entertainment cliché.

But there’s no money to be made on Wall Street fighting that war, greased as it always has been, by greenbacks.

Cowing average investors into returning their savings to the stock market is another matter. There is no question that investors, especially in the wake of disastrous pandemic policies and progressively ballooning multi-trillion dollar “solutions,” have been choosing between stocks and cryptos (see last week’s Trends Journal article here).

The move against Binance should be seen in a larger context than the crusading “do-gooder” narrative of authorities. These are the same ones, after all, allowing the most lethal drugs to pour into the U.S. at an increase of over 230 percent since January.

BINANCE RESPONDS TO REPORT OF FEDERAL INVESTIGATION. Binance, the world’s largest cryptocurrency exchange, responded to a Bloomberg News report that U.S. DOJ and IRS officials are seeking “information from individuals with insight into Binance’s business.”

Federal agencies haven’t yet formally accused Binance of wrongdoing. Currently, Americans aren’t even permitted to trade on the platform.

A response by a Binance spokesperson to The Block made it clear the company believes the Fed is setting a narrative regarding criminal activity:

“We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion. We have worked hard to build a robust compliance program that incorporates anti-money laundering principles and tools used by financial institutions to detect and address suspicious activity. We have a strong track record of assisting law enforcement agencies around the world, including in the United States. We don’t comment on specific matters or inquiries.”

Binance has made recent moves to hire former politicians and regulators from regulating entities, including former Senator (and former Ambassador to China) Max Baucus of Montana, and two former members of the Financial Action Task Force (FATF). The Trends Journal has previously outlined the aims and central bank powers behind that organization.

WILL “TAPROOT” UPGRADE HELP BTC REBOUND? The Taproot project seeks to upgrade Bitcoin with enhanced privacy and security features and other efficiencies. The upgrades must be accepted in sufficient numbers by Bitcoin miners.

Though Taproot didn’t achieve adoption in a first round of surveying on the Bitcoin network blockchain, advocates believe the Taproot upgrades will take hold before the end of 2021. If that happens, it may give a boost to what has been the most established and dominant cryptos by market cap, but which is one of the oldest, with issues related to mining and transaction efficiencies.

Taproot comprises three distinct Bitcoin Improvement Proposals, or BIPs: Schnorr Signatures, Taproot, and Tapscript. According to River Financial, Schnorr Signatures will enhance privacy, lower fees, and provide more flexible multisig capabilities. 

Taproot and Tapscript add specifications and “opcode” scripts that open up new ways of transacting with Bitcoin, including something called Pay-to-Taproot (P2TR), as well as adding flexibility for future P2TR upgrades.

Obviously, the nuts and bolts of the Taproot upgrade may sound a bit murky and technical. But the takeaway for average investors is that the Bitcoin community seems poised to implement Taproot, possibly soon. And that may give Bitcoin a distinct boost.


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6 Comments
  1. andrej 4 months ago

    Regulators? Bah! They regulated OneCoin allright, for starters.

    http://www.jlevy.co/2021/05/17/onecoin-ponzi-scheme-accused-of-terrorist-financing/

  2. Ismael Quinones 4 months ago

    How far will Bitcoin and Ethereum drop?

    • andrej 4 months ago

      It all depends on Elon’s tweets.

      • roksteady 4 months ago

        View Elon’s bitcoin about-face in light of the CCP announcement that they are banning cryptos as a form of payment. That said, it was only a few weeks ago that they (CCP) announced that they accepted cryptos as a speculative asset class. They’re obviously not looking to ban them altogether, that would be impossible and extremely foolish, but they are making sure that they will not rival the digital yuan as a form of mainstream exchange. Even so, a lot of the bigger blockchain projects are completely decentralised and global in scope so, as an asset class, their value will be somewhat insulated against the rise/fall of any one national economy or currency

  3. Ismael Quinones 4 months ago

    With inflation on the horizon and the stock markets choppy why don’t bitcoin and ethereum continue to rise?

    • roksteady 4 months ago

      People taking profits, investors getting spooked by news of investigation and regulation and, dare i say it, market manipulation

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