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Ethereum 2.0 Testnet to Launch: Can the Blockchain Network Keep Up With the Surge in Demand?

Over the last couple of months, Ethereum has been experiencing a lot of exciting news, with its rally on the crypto market and its plans to launch its final 2.0 testnet, “Medalla.”

What Explains The Higher Transaction Records on Ethereum?

The number of transactions on Ethereum has seen an all-time high and has shot up over the last few months. However, crypto experts are debating on whether the blockchain network can keep up and whether its scalability is reliable enough.

Crypto investors have been speculating that the higher number of transactions that have been ongoing on Ethereum’s blockchain is attributed to the rise in popularity of decentralized finance (DeFi) protocols such as Uniswamp and Compound. Another explanation debated upon by Ethereum experts is that the anticipated launch of ETH 2.0 testnet, Medalla, is causing an increasing amount of transactions processed on the blockchain.

However, though these are valid explanations, there may be other reasons why Ethereum’s network activity has been soaring. Ponzi schemes such as Forsage, MMM and Lion’s Share seem to have something to do with Ethereum’s increased network activity. In fact, over the last month, these scam smart contracts were responsible for approximately 5,600 Ether (ETH) in gas fees over the last months. Since mid-July, it has also been recorded that at least 1 million daily transactions have been processed on Ethereum at the cost of 21 billion gas.

Gas Prices Inflated With Ponzi Schemes

If one were to solely look at smart contract activity running on the ecosystem, 57 billion transactions on the Ethereum blockchain network are allocated towards those transactions. Ponzi schemes make up about 17 billion of that consumption, and so almost 30% of smart contract activities can be accredited to fraudulent investing scams. Due to these scams, gas prices have undergone inflation and are priced from anywhere between 30-90 gwei, the most commonly used unit of Ether crypto.

With the rising popularity of Ethereum’s network and Ether prices continuously surging, Ethereum has been working on implementing a better scaling solution with ETH 2.0 to process the mass amount of transactions that are occurring on the blockchain.

ETH 2.0 Final Testnet Set to Launch

Co-founder of Ethereum, Vitalik Buterin, has spoken up about Ethereum 2.0 earlier this year. The 2.0 multi-client testnet is set to launch on August 4, at 1 pm UTC, and the Ethereum community has been anticipating its release.

Ethereum executive coordinator Danny Ryan has confirmed that the criterion for the amount of validator the testnet needs to have pre-launch has been met.

Scalability of ETH 2.0

In the past, when discussing the developing blockchain, Buterin had disclosed that the data capacity of ETH 2.0 will be immense. However, as his blockchain ecosystem is still being perfected, the upgrade will not necessarily translate to higher scalable transactions for the time being, meaning that the blockchain will not necessarily process more transactions for now.

Ethereum On the Search For Cybersecurity Team

Ethereum developers are working on making the blockchain more scalable, more efficient, and faster, and they have been coming up with innovative solutions to maximize and improve the performance of Ethereum 2.0 testnet before the launch of ETH 2.0 mainnet.

Just yesterday, Ethereum 2.0 researcher Justin Drake took to his Twitter platform and announced that Ethereum Foundation was looking to build an “internal security team dedicated to Eth2.”

Tesla's Biggest Drop Indicates a Stock Market Downtrend—Implications for the Bitcoin and Crypto Market

Yesterday, Tesla stocks plunged dramatically, suffering their biggest loss since going public. 

The tech giants stock also plummeted, with the Dow Jones Industrial Average dropping by 2.3% and the Nasdaq Composite losing by 4.1%.

Tesla stock plummets

The electric-car maker’s stock—Tesla dropped by 21% in what investors deemed a terrible trading day, suffering its biggest drop yet. Tesla stock has been reported to have lost around 33.7% of its gains, falling from grace from a high of $498.32 in the past week.

According to reports by Blockchain.News, there appeared to be clues that the stock would undergo a massive sell-off. One of the indicators seemed to be when investment management firm Baillie Gifford, a long-time shareholder of Tesla stock, solid its shares and cashed out its gains at the same time as the electric car and battery maker’s stock hit a record high.

With Tesla stock’s bearish momentum, the market has suffered a huge loss as it continues its stock market downtrend.

On March 18, Tesla’s price was trading around $70.10. It reached a record-high of $502.49 on September 1, but the Tesla stock has since then plunged in value, trading around $330 on NASDAQ at the time of writing.

Bitcoin breaks $10K

As for the crypto market, there appears to be significant movement and high volatility as well. After recording lows of $3,600 on BitMEX on March 13, Bitcoin, the top cryptocurrency by market capitalization, hit its high of the year, surging to $12,400.

Since then, Bitcoin has fallen back from $12,400 and seems to be consolidating around $10,000.

We have explained why the Bitcoin and crypto market is expected to crash before the opening of the Dow Jones. In order to prevent another dip from happening, the Bitcoin price needs to stay above the 90-day moving average.

Source: TradingView

At press time, Bitcoin (BTC) broke below the $10K and rebounded a bit again. As the chart showed, the 90-day moving average can hardly be seen as the support level anymore. Should BTC pricing experience another dip in the future, the 90-day moving average would instead turn into a strong resistance level.

Related: 3 Reasons Bitcoin and Crypto Market Will Crash Again

A Case of Bad Sushi

The crypto market also suffered a huge loss over the past week, with the SushiSwap (SUSHI) token crashing after its anonymous founder cashed out. The price of the SUSHI token, which reached a high of $15.97 on September 1, plummeted to $1.13 in the following days, plunging to one of its lowest price levels.

The nosedive experienced by the crypto market could therefore be in part attributed to SushiSwap (SUSHI) token price, which will test the 5-day moving average (MA) soon.

Source: Binance

However, if there are not enough funds to support the SUSHI token price, the fall of SUSHI would overlap with Bitcoin’s price drop and the stock market going down. These overlaps will cause a crash for the crypto market again.

Why are the stock and crypto markets crashing?

There seem to be no signs of fast recovery for the stock and crypto market, with a lack of new money supply influx. Additionally, investors earning a quick profit through pump and dump strategies and cashing out their profits on a short-term market run seem to be inhibiting the market’s recovery. Although the US dollar has risen a bit and given investors a bit of hope, there seem to be no signs of any bullish momentum for the markets, as economic stimulus packages have not yet been rolled out by the United States government.

The stock market seems to be on the verge of a downtrend again, and consequently, it may lead to the plunge of the crypto market along with it.

Bitcoin whales

For Bitcoin, many companies and financial institutions are showing an increased interest in buying the cryptocurrency asset. As reported by Blockchain.News on August 11, MicroStrategy purchased 21,454 BTC for $250 million, averaging $11,652. 84 per Bitcoin. In addition, Grayscale Investments’ parent company Digital Currency Group (DCG) also invested $100 million into Bitcoin mining projects. This endorsement of the digital asset by big-name firms could in turn drive up the Bitcoin price. However, whether it is enough to save the crypto market from another downtrend is still up for debate.

With additional reporting provided by Kun Hu.

Paxful Crypto Peer-to-Peer Marketplace Expands Beyond Bitcoin with Tether USDT Stablecoin

Paxful, the leading peer-to-peer Bitcoin trading platform, announced that it will be adding stablecoin Tether to its crypto payment options.

By adding Tether (USDT) to its crypto marketplace, Paxful is hoping that investors could be better protected against the volatility of the crypto market and that it could be an improvement to their assets portfolio. With Bitcoin and Tether, Paxful users could pay for goods and services online with cryptocurrency, as well as buy and trade digital assets among themselves with ease.

Paxful enlists Tether

Paxful already offers more than 300 payment options as of now. With the addition of Tether, the global peer-to-peer Bitcoin marketplace hopes to enable users to “be more in control of their finances.” The company also asserts that Tether can be leveraged for digital asset protection against inflation, and a hedge option, when needed. During Bitcoin (BTC) price fluctuations, Paxful users could convert BTC to USDT, and vice versa, to protect their crypto assets. Co-founder of Paxful, Ray Youssef, said:

“We consider this a big step for us since this is the first cryptocurrency other than bitcoin we have on the platform. We always listen to our users. We understand that they go to Paxful for wealth generation and turn to crypto for stability when their national currency is affected by inflation.”

Fighting inflation with USDT stablecoin

Tether’s addition to Paxful is big news for investors, as USDT is the largest stablecoin. Trailing behind Bitcoin and Ethereum, Tether is the third-largest cryptocurrency by market capitalization, with a value of $14 billion. The stablecoin’s value mirrors that of the US dollar and is often leveraged as an option by first-time crypto investors who are looking to venture into digital currency investments.

Due to the high cost and transaction fees of converting crypto to fiat and vice versa, Tether is seen as an interesting alternative by many, as it is cost-friendly and economical. After converting fiat to Tether on the trading platform, the digital currency could be traded for more volatile crypto, such as Bitcoin.

At the time of writing, Bitcoin trading platform Paxful has listed 4.5 million registered wallets and is reported to have reached 4.6 billion USD in trading volume. The peer-to-peer (P2P) marketplace is anticipating a bigger influx of new traders for the months to come.

Bitcoin for wealth

In an exclusive interview with Blockchain.news earlier this year, Youssef discussed how this was the perfect time to capitalize on Bitcoin investments, saying that peer-to-peer trading is an emerging investment tool that will benefit many investors, as COVID-19 has severely dented major economies worldwide. With countries desperate to recover, “radical economic measures” have put in place to reduce the impact. However, the measures have not always proven to be beneficial. CEO of Paxful Youssef said:

“These measures have the potential to hurt the economy in the longer run. In this case, Bitcoin can serve as a better store of value for wealth. This means an even more robust ecosystem of P2P trading with newer participants and a greater reach.”

Bitmain Partners With Digital Currency Group's Foundry to Fuel Crypto Mining Business in North America

Crypto mining giant Bitmain has announced that it will be partnering with crypto mining firm Foundry to extend its services to North America.

The announcement was made on September 10, and through the partnership, Chinese Bitcoin mining firm Bitmain hopes to enhance its financial services to North American customers. Bitmain has announced that it has been collaborating with crypto powerhouse firm Digital Currency Group (DCG)’s subsidiary, Foundry for quite some time. The latter has been able to provide the capital needed to fund crypto mining equipment for many of Bitmain’s large-scale clients. According to Bitmain, the partnership has been beneficial, as it has enabled mining businesses to grow and the overall ecosystem has been strengthened.

Marketing Director of Antminer at Bitmain, Su Ke, said:

“Through Foundry’s work and financial support of our end customers, we have been able to ship a significant number of machines into North America this year.”

Bitmain has vouched for Foundry, saying that the crypto subsidiary firm of Digital Currency Group has been one of the largest Bitcoin miners in North America. Through its equipment financing to other mining organizations, it has facilitated “almost half of the Bitcoin mining delivered in North America this year.” Established in 2019, services that Foundry offer includes institutional expertise, market intelligence to crypto miners and manufacturers alike, and capital. Speaking about his company, CEO of Foundry Mike Colyer said:

“Foundry was established to empower miners with the tools to build tomorrow’s decentralized infrastructure. an important part of this is addressing the chronic lack of financing options, which is holding back many successful mining businesses from scaling their operations.”

Bitmain continues to expand, partnering with firms like Foundry to support customers and institutions looking to scale their businesses. At the beginning of this month, Bitmain also expanded its growth by signing a new $23 million Antminer S19 Pro Contract with Marathon Patent Group.

Antminer S19 Pro is said to be equipped with the most advanced chipset currently available on the market and seems to be the preferred choice of major mining firms’ orders.

Antminer Sales Director of NCSA Region for Bitmain, Irene Gao, had said that these new miners were set to “bring in a new era of Bitcoin mining.”

European Central Bank President: Coronavirus Has Accelerated Digital Currency Adoption

COVID-19 has led to an acceleration in digital payments adoption and technological innovation, as seen by the spending pattern of European citizens.

During an online conference with the Deutsche Bundesbank, European Central Bank (ECB) President Christine Lagarde discussed current banking and digital contactless payments.

Digital era is here to stay

According to ECB President Lagarde, consumer preferences have seen an increase in digital contactless payments, with Europeans taking to online platforms for their retail needs during the pandemic. With the digital revolution at our footsteps, “more than four in five Europeans regularly use the internet, up from one in five two decades ago,” said Lagarde. Global payments have been increasingly on the surge, as the pandemic has driven the digitization trend forward.

Lagarde spoke about financial strategies that the European Union could adopt with digital payments and currency to remain competitive on a global scale. She addressed the shift in consumer preferences and the fast-paced digital trend, discussing European Central Bank officials’ current plan for a European Central Bank Digital Currency (CBDC). She said:

“The coronavirus (COVID-19) pandemic has accelerated this trend towards digitalization. E-commerce, which has grown steadily in recent years, increased by almost a fifth in terms of volume of sales between February and June 2020, while in-store sales declined.”

Since COVID-19 erupted, Lagarde has asserted that online payments have soared in volume, recording double-digit growth. With consumers globally transitioning to a new digital normal, Lagarde said:

“This trend is unlikely to be reversed once the pandemic is over.”

Digitalization of Europe

The former chair of the International Monetary Fund (IMF) quoted a survey conducted in 17 European countries that indicated that most European consumers expected to continue leveraging digital services “as often as they do now or even more often,” after the pandemic.

With digital payments, scalability is an important issue, and Lagarde addressed the importance of dominating payments on a global scale to remain competitive. She said that foreign countries have taken the lead in digital payment options, referencing China. The European Central Bank President said:

“Europe has fallen behind in this competition. The lack of payments integration in Europe means that foreign providers have taken the lead. […] In a digital world, consumers must have the possibility to pay with sovereign money.”

Will China be the first to roll out a national CBDC?

The European Central Bank president added that China had managed to transition from cash to mobile payments within a decade and that tech firms were also responsible for driving this digital trend forward. Lagarde mentioned that to stay ahead of the global competition, a CBDC must be implemented. The former head director of the IMF said that the European Union was currently still working out the logistics behind the launch of a central bank digital currency to facilitate more efficient cross-border payments and overall digital transacting.

The results studying the potential effects of the launch of a CBDC in Europe are to be announced in the upcoming weeks.

China has on its end been gaining momentum in the global race to be the first to launch a regulated and national digital currency. The country has been developing its CBDC for quite some time, testing its digital currency electronic payment (DCEP) in wealthier cities around China with small-scale retail transactions.

US Sanctions Crypto Addresses of Russian Hackers Accused of Running Presidential Election Interference

US Department of Treasury has released a Specially Designated Nationals list of Russian hackers and their crypto addresses, under allegations that they have been working to interfere with the 2020 presidential election.

The nationals list includes St. Petersburg natives Anton Nikoaleyvich Andreyev, Artem Mikhaylovich Lifshits, and more. Though this is not the first time the Office of Foreign Assets Control (OFAC), under the US Department of Treasury, has named crypto wallet addresses in their sanctions, it is the first time that digital wallets including such a huge range of digital currencies – Litecoin, ZCash, Ether, and Dash – have been reported for their involvement in funding an election interference conspiracy.

Project Lakhta

Under allegations of wire fraud conspiracy and misconduct, the US Department of Justice filed criminal charges designated at Lifshits, a 27-year-old Russian national. He is accused of having purposely interfered with US elections beforehand, and of doing it again. Artem Lifshits is alleged to have played a major managing role in Project Lakhta, a multimillion-dollar Russian-based operation using propaganda to conduct political and presidential electoral interference.

Through Project Lakhta, the Department of Justice (DoJ) decreed that Lifshits illegally accessed US confidential documents and used the identification credentials of American citizens to open cryptocurrency, Paypal, and bank accounts. Under the criminal complaint filed with the DoJ, US attorney Zachary Terwilliger said:

“Project Lakhta conspirators used the stolen identities of U.S. persons to further their goals of undermining faith in our democratic institutions and for personal gain.”

The criminal complaint was filed hours after the US Treasury released an official sanction list of Russian nationals, along with their respective cryptocurrency wallet addresses. US attorney Terwilliger added during the legal complaint:

“Federal law enforcement will work aggressively to hold accountable cyber criminals located in Russia and other countries, which serve as safe-havens for this type of criminal activity.”

Lifshits is accused of conspiracy to commit wire fraud and for “opening fraudulent accounts at banking and cryptocurrency exchanges” with stolen ID credentials originating from American citizens.

Electoral interference started in 2014

This is not the first time that US law enforcers have cracked down on Russian nationals for running presidential election interference through crypto funding. Russian nationals have been accused of scheming and running political campaign interference since at least 2014 when Project Lakhta first rose to notoriety. The complaint read:

“Since at least May 2014, Project Lakhta’s stated goal in the United States has been to disrupt the democratic process and spread distrust towards candidates for political office and the political system in general.”

The sanction and criminal complaint from the US Department of Justice come at a critical time, with the upcoming presidential election in 2 months.

Kiss' Gene Simmons and Winklevoss Discuss Bitcoin and Crypto for the Unbanked

Kiss frontman Gene Simmons figures among the mainstream celebrities that back cryptocurrency’s largest asset, Bitcoin (BTC), leveraging the digital currency to diversify his investment portfolio.

Making Ether and Bitcoin accessible

Responding to a Twitter thread from Gemini co-founder Tyler Winklevoss, the Kiss rock band vocalist responded with a message that many in the crypto community viewed as cryptic.

Bitcoin billionaire Cameron Winklevoss had continued educating his followers and the crypto world regarding Bitcoin as a safe-haven asset. In a discussion addressing “systematic disenfranchisement”, racial biases, crypto assets, and more, the Gemini co-founder said:

“It’s easier to buy #Bitcoin and Ether if you are already in the old system. If you don’t have a bank account, it’s hard to get funds into crypto. We need to change this.”

To which Kiss co-lead singer Gene Simmons responded, “I will. I am.”

Gene Simmons believes in crypto power

The comment has led many Bitcoin enthusiasts dumbfounded, as the rocker did not elaborate more. However, Simmons implied through the comment that he was a crypto advocate and that he backed Winklevoss’ aspirations for Bitcoin and altcoins.

In a previous interview with The Street, the Kiss co-founder had referenced Bitcoin and how he had leveraged it to diversify his investment portfolio. He had previously said:

“I am interested in Bitcoin, but only as a piece of the [investment] puzzle.”

Adding to the comment, the music celebrity had said that he would potentially be interested in “Kiss coins,” if the occasion came up. Simmons seemed receptive and open to opportunities that crypto assets could bring.

Winklevoss – Crypto for income inequality

The advantages that cryptocurrency adoption could bring was further elaborated by Cameron Winklevoss in his thread. He discussed how digital assets, like Bitcoin and Ether (ETH), could vastly change the global scope of income inequality, discrimination, wealth, and more. The Bitcoin billionaire said:

“Mortgage discrimination prevents families from building and maintaining wealth from generation to generation. There is no discrimination in crypto.”

Along with his brother Tyler Winklevoss, the Gemini co-founder has been actively working to educate people about Bitcoin and digital assets, as the brothers have made a huge part of their fortune off investing in BTC. Cameron Winklevoss retweeted his brother, who applauded business intelligence and tech firm Microstrategy on acquiring even more BTC. The institutional firm figures among the wave of new Bitcoin whales who have diverged their assets into Bitcoin as a hedge.

Microstrategy among institutional firms to move on BTC

Microstrategy acquired an additional 16,796 BTC “at an aggregate purchase price of $175 million. Founder of Microstrategy, Michael Saylor announced, “To date, we have purchased a total of 38,250 bitcoins at an aggregate purchase price of $425 million, inclusive of fees and expenses.”

Bitcoin billionaire Tyler Winklevoss applauded the move and responded through Twitter:

“Publicly-traded company Microstrategy is stacking stas! They now sit on 38,250 Bitcoin in their treasury reserves. They understand that bitcoin will outrun the scourge of inflation.”

The Winklevoss twin, along with his brother have made a case and presented an educated report on how Bitcoin would inevitably reach $500k.

Bitcoin is currently trading at $10,695, at the time of writing.

Leaked EU Commission Draft on Crypto Assets Law: How Will Cryptocurrency be Regulated?

A leaked European Union legislative draft on digital assets reveals the European Commission’s plans for cryptocurrency trading and issuance across the nation.

Downside of the proposed crypto regulatory measures

The draft legislation, proposed by Europe’s Markets in Crypto-Assets (MiCA) department, is allegedly supposed to be released by the end of the month. It dictates that the European Union wishes to treat cryptocurrency and regulate it as they would any other financial instrument. In that sense, the regulation would follow a clear framework, and legally, cryptocurrency issuance and trading would be treated the same as existent monetary investments and securities markets.

The leaked draft lays down the financial rules in a straightforward manner. A downside of it, however, may be that cryptocurrencies’ innovative growth may be hindered. The field of digital assets has been quickly evolving and new digital innovations are brought forth daily.

As the industry is fast-changing and new technological solutions are proposed on the regular, the question brought forth by many is whether the European Union’s legislative draft may potentially hinder the growth of cryptocurrency assets.

Sneak Peek of the EU crypto assets regulatory draft

The proposals brought forth by MiCA are not unlike that of the EU’s Markets in Financial Instruments Directive (MiFID), which is a regulatory framework overlooking investments, securities markets, and fiat trades. In the legislative draft, MiCA proposes a comprehensive definition of crypto assets, followed by a clear set of rules to follow for those that intend to trade and invest in cryptocurrencies.

The regulatory framework and financial laws apply to investors, cryptocurrency exchanges, platforms, service providers, etc. The guidelines put forth for service providers also bear resemblance with the Financial Action Task Force (FATF)’s definition of a “virtual asset service provider.”

A part of the leaked proposal on crypto asset reads:

“This proposal is part of a broader framework on crypto-assets and distributed ledger technology (DLT), as it is accompanied by proposals ensuring that existing legislation does not present obstacles to the uptake of new technologies while still reaching the relevant regulatory objectives.”

Digital currency adoption on the rise

Recently, in an online conference with the Deutsche Bundesbank, European Central Bank’s President, Christine Lagarde, broached the subject of current banking and digital contactless payments. Lagarde said that with coronavirus, consumer preferences have shifted, and digital contactless payments have been on the rise. This trend is most likely to stay and continue after the pandemic.

Furthermore, she spoke about the European Central Bank’s plans and progress regarding central bank digital currencies (CBDC). She said:

“Europe has fallen behind in this competition. The lack of payments integration in Europe means that foreign providers have taken the lead. […] In a digital world, consumers must have the possibility to pay with sovereign money.”

Leading the pack for CBDC is China, which has already begun the experimentation phase for its digital currency, DCEP. The Digital Cash Electronic Payment, China’s version of a CBDC, is to be fee-free and is being tested in the wealthier cities of the country.

Kraken Is the First Cryptocurrency Exchange to Become a US Bank

Kraken San Francisco-based crypto exchange was approved yesterday by the Wyoming Banking Board and is now the first exchange to become a US bank.

The crypto exchange applied for a special purpose depository institution (SPDI) license and was approved by the Wyoming Banking Board. Following the approval of its charter, Kraken is now the first SPDI bank in the US, located in Wyoming state. This entails that Kraken crypto exchange can now hold digital assets in custody, approve payment transactions, and operate payments systems; customers will also be able to easily switch between fiat money and crypto. Speaking about the matter, Kraken’s financial managing director David Kinitsky said:

“By becoming a bank we get direct access to federal payments infrastructure, and we can more seamlessly integrate banking and funding options for customers.”

Not only has Kinitsky taken on Kraken as a business venture, but the managing director has also formerly been part of Grayscale Investments firm and Fidelity Investments. Now, with crypto horizons looking great for Kraken, the managing director has taken it upon himself to expand and enhance digital services through the crypto exchange.

License has a few limitations for Kraken

Though this is a step forward for Kraken, the SPDI charter does come with a few limitations.

Kraken will be considered a custody bank under the Wyoming Banking Board’s license approval, and this subsequently will mean that the crypto exchange will not be allowed to issue loans from customer deposits. Furthermore, customers’ digital assets reserves are to be maintained and held by Kraken, following Wyoming’s state law.

Kraken’s crypto aspirations after becoming a US bank

The coin exchange plans to introduce new features to their existent services, and there are talks of a potential crypto debit card being issued, as well as staking services. These will all take time to come into effect and are rumored to begin next year.

Furthermore, after the bank officially launches, Kraken intends to offer services in which US residents, excluding New Yorkers, could pay their bills in cryptocurrency, as well as receive their salary in digital assets form. Cryptocurrency funds could also be held with the bank, and Kraken will maintain its customers’ crypto investments, just like any traditional financial institution.

Chief legal officer for Kraken, Marco Santori, shared his enthusiasm about the news on Twitter. He said:

“Kraken just won approval to create America’s first crypto bank. World, please meet Kraken Financial. Kraken Financial, world. Wait, a what? Kraken is a BANK?! How did this even happen?!”

Through its title as America’s first crypto bank, Kraken will be able to provide digital asset custody services to investors in 49 states.

Australian Federal Agency Ex-Employee Evades Prison Despite Illegally Mining Ether and Monero on Supercomputers

A former employee of an Australian federal agency avoided prison despite mining cryptocurrency on government supercomputers.

Former CSIRO contractor illegally mines crypto

Jonathan Khoo, a former 34-year-old contractor for the Commonwealth Scientific and Industrial Research Organisation (CSIRO), was alleged to have used the supercomputers at work in order to mine Ether (ETH) and Monero (XMR). The total amount of crypto he mined came up to an approximate $9,420 AUD, which translates to $6,897 USD. Khoo then proceeded to deposit the profit of the digital assets into his own wallets.

The illegal act was said to have cost the CSIRO at least $56,133 USD in computer power and other resources.

In order to achieve his cryptocurrency mining profits, it was reported that Khoo installed code onto two supercomputers. The critical computer processing power used for his Ether and Monero gains could have been harnessed for sensitive scientific projects instead. Federal Police for the Australian cybercrime division, Chris Goldsmid, shared with local news outlet The Sydney Morning Herald:

“This man’s activities diverted these supercomputer resources away from performing significant scientific research for the nation, including pulsar data array analysis, medical research and climate modelling work.”

How Khoo evaded jail time

However, despite his wrongdoings, it appears as though the Australian Federal Court has decided to not send the ex-CSIRO employee to jail.

Instead, after his court appearance on Friday, Khoo was handed a 15-month intensive correction order. Magistrate Erin Kennedy had decreed that the former CSIRO agent will serve his sentence through 300 hours of community service. In addition, Khoo is to attend counseling services.

Khoo’s legal attorney Avni Djemal had argued in court that his client held no prior offenses, had admitted the wrongdoing when confronted by the police, and had shown serious remorse for his actions. He also called on the court’s empathy by saying that Khoo had been fired after the Commonwealth Scientific and Industrial Research Organisation had discovered that Khoo was charged with illicit crypto mining.

In discussing the case, Magistrate Kennedy said that the misconduct was less severe than other crypto crimes, where similar cases of secure government breaches had occurred. However, she said that it was not to be taken lightly and that “it is significant that a federal agency like CSIRO had been targeted.”

In other cases, the maximum penalty that an offender could accumulate for “unauthorized modification of data to cause impairment” was 10 years in prison.

Crypto scams are on the rise

Cybercrime revolving around crypto has been reported to be on the rise. A study released by Scamwatch indicated that there has been a significant growth in crypto scams in Australia.

At least $634 million AUD of crypto assets have been generated through cyber scams.