Bitcoin Price Analysis

The cryptomarket remains coiled as we lead into the weekend with no new highs and no new lows being established for bitcoin. However, it is nicely consolidating on lower time frames and hints toward the possibility of another leg up:

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Figure 1: BTC-USD, Hourly Candles, Consolidating Pennant

The pattern shown in Figure 1 outlines a potential continuation pattern called a “bullish pennant.” It’s characterized by consolidating volume and consolidating price that yields lower highs and higher lows and has general upper/lower trendlines. This particular pennant is quite sizable as it is consolidating at the top of a 12% market rally that pushed the price to test the $4,000 range. A general price target for an upward breakout of a pennant is calculated by taking the length of the run upward (called the “pole”) prior to consolidation and extending it from the point of breakout:

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Figure 2: BTC-USD, 2-Hour Candles, Bullish Pennant Measured Move

In our case, the measured move for our pole is $430. If we break out upward, we can expect, at minimum, to retest the upper band of resistance discussed in last week’s analysis. And, if we are lucky, we could see a move to test the mid $4,000s.

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Figure 3: BTC-USD, Daily Candles, Test of Current Highs

The current rounds of bullish pressure correspond to a breakout of a massive consolidation pattern called a “symmetrical triangle.” We are set up for a strong macro move to the upside, but we have yet to break our current bearish market structure. A daily close above the red dashed line would be a step in the right direction as this would indicate bearish exhaustion and an inability to overwhelm the current buying pressure.

If we manage to close a new high above the red dashed line and the thin purple line shown in Figure 3, then we will likely realize the full potential of the bull pennant as we test the $4,400s and (most important) the highest high of our current market structure:

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Figure 4: BTC-USD, Daily Candles, Symmetrical Triangle Price Target

This is still a long way away, but there is even a possibility that we will test the $5,000 range as this is the price target for the macro symmetrical triangle consolidation.

For now, it’s very important to remain objective as we start to see strong bullish setups form in the market. It’s important to remember that we are still in a bear market and we have yet to break our current market structure. Until we see a close above our current highs, the trend is still downward.

Summary:

  1. A low time-frame bullish pennant paves the way for a potential macro resistance test, just overhanging the current price level.
  2. A breakout of the pennant could yield a test of the current market structure as the measured move for the pennant is approximately $430.
  3. We have yet to close a new high on the daily candles, but there are a couple bullish setups on both the low time frames and high time frames.

Trading and investing in digital assets like bitcoin is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Inc related sites do not necessarily reflect the opinion of BTC Inc and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

This article originally appeared on Bitcoin Magazine.

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According to a recent statement made by Ohio’s state treasurer, so far, only two businesses have filed their taxes in crypto using the state’s crypto tax payment scheme.

Speaking at a forum organized by the Ohio State Associated Press on February 19, 2019,Robert Sprague fielded questions about the department’s experiences with the newly launched bitcoin payment option for taxes, which was set up by his predecessor Josh Mandel in December 2018. Sprague, who assumed his position a little over a month ago, states that the country has received only two tax payments so far on the state’s official crypto payment platform, OhioCrypto.com

In addition, he said, “We’re reviewing how [the program] might be either curtailed or might be expanded, and what our counter-party risk is with that vendor.”

However, a spokesperson declined to offer specific details concerning the exact value the state has received in bitcoin-paid taxes, claiming that such tax-related information is covered by financial confidentiality.

Still, the slow rate of usage won't deter the state, whose lawmakers are hoping to become a major hub for the blockchain industry.

As stated earlier, the new tax payment system was established by Josh Mandel, who viewed cryptocurrencies as a legitimate form of money.

At the time, Mendel said:

“Our biggest motive here was to give taxpayers more options in paying their taxes,” going further to tell Bloomberg that the state was “proud to do our small part and take this small step to make Ohio the first state in America to enable taxpayers to be able to pay via cryptocurrency.”

According to reports, the filing process for making these payments includes three steps.

The first step is registration. Businesses have to register with the Office of the Ohio Treasurer and set up their accounts on the state’s tax payment platform. From there, they would enter their tax details (including tax period and the payment amount) on the platform, after which time they can pay their taxes with bitcoin from a “compatible” wallet (these include the BRD, Mycelium and the Bitcoin Core client, as well as others “compatible with the Bitcoin Payment Protocol”).

Once made, the payments are processed by BitPay, the Atlanta-based bitcoin payment processing firm. From BitPay, the digital assets are converted into dollars and sent back to the state treasurer’s office as the final step of the process.

This article originally appeared on Bitcoin Magazine.

Bitcoin Price Analysis

Over the course of the last 10 days, bitcoin has managed to rally nearly 20% in value as it burst through two major resistance levels and is now beginning the test of a major macro level:

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Figure 1: BTC-USD, Daily Candles, Macro Resistance

We can see a clear, descending supply-and-demand channel that governed the market for the last two months. Yesterday, the market broke north of the channel and it has since begun to march toward a major macro level (red dashed line). This level is very significant; A test of this level will make or break the current market structure. If we fail to break through and fail to close a new high, this could be a strong bearish signal that supply is still highly present in the market and needs to be shaken out before any meaningful upward progress is made.

At the moment, we are currently breaking out of a large, symmetrical triangle that has quite a large price target:

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Figure 2: BTC-USD, Daily Candles, Symmetrical Triangle

The symmetrical triangle (outlined in purple) is a huge consolidation pattern and has the potential to reach the $5,000 range based on the measured move for symmetrical triangle breakouts.

It’s important to note that we are still in a bear market, and it’s possible to see a fakeout of this consolidated breakout. We will have more information once we test the resistance level and, for now, we seem clear for another bit of movement to the upside.

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Figure 3: BTC-USD, Weekly Candles, 200 EMA Level

Sitting just above the aforementioned resistance level lies the weekly 200 EMA. The weekly 200 EMA is a notoriously tough level to break as it represents the general macro health of a market. To date, we have tested it a couple times but have not managed to close above it in many months.

There are many levels to overcome with this symmetrical triangle breakout and they shouldn’t be underestimated. For now, things are looking bullish on the low timeframes and we must keep an eye on the higher time frames as we are on the cusp of breaking market structure. Patience is necessary here because these markets are volatile and one could easily be stuck in an unfavorable position.

Summary:

  1. A strong rally pushed the price up 20% over the last 10 days. So far, we have yet to establish a new high.
  2. Just above the current price level is a strong band of resistance that the market has failed to break. This resistance includes the weekly 200 EMA — a notoriously strong level to break.
  3. If we fail to pop a new high, we can expect to see a retest of the low $3,000s.

Trading and investing in digital assets like bitcoin is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Inc related sites do not necessarily reflect the opinion of BTC Inc and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

This article originally appeared on Bitcoin Magazine.

Bitmain Unveils Its Latest Energy-Efficient Mining Chip for Bitcoin

China-based mining giant Bitmain has announced a new mining rig that uses less power. The hardware mining manufacturer has launched a 7nm application-specific integrated circuit (ASIC) processor dubbed the BM1397.

Beyond energy efficiency, the new mining processor promises to achieve faster performance for mining cryptocurrencies that use the SHA256 algorithm for their proof of work (PoW), including Bitcoin and its hard forks.

Like the BM1391 chip that came before it, the BM1397 will be powered by the advanced semiconductor manufacturing technology called the 7nm FinFET process, integrating more than a billion transistors and “optimized for maximum efficiency."

A statement from Bitmain on its blog reads:

"The new BM1397 chip requires lower power and can offer an energy consumption to computing ratio as low as 30J/TH. This is a 28.6 percent improvement in power efficiency in comparison with Bitmain’s previous 7nm chip, the BM1391."

Since the market crashed last year, cryptocurrency miners have been shutting down operations across the world as it has become less profitable to mine bitcoin with falling prices and fixed energy costs. Bitmain, which has had operational issues of its own, touts its BM1397 as a solution for miners who want to improve the performance of their mining operations. The new 7nm bitcoin mining processor will feature in Bitmain's soon-to-be-released Antminer mining rigs — the S1f7 and T17.

Bitmain also unveiled a mining rig for the Equihash algorithm used by privacy-centered crypto Zcash and an Ethereum-focused ASIC miner last year.

At the time, the development of ASIC miners prompted Ethereum's core developers to agree to implement a new ASIC-blocking algorithm, programmatic proof of work (ProgPoW), which restricts the mining hardware on the network.

Security lead of the Ethereum Foundation, Martin Holst Swende, had noted at the time that implementing the code change would hasten the network's eventual transition to a proof-of-stake algorithm, where ether is mined by staking coins, not by burning energy.

This article originally appeared on Bitcoin Magazine.

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Whilst debate raged throughout the Bitcoin community over whether the block size limit should be increased and how, Luke-jr for years stood out for arguing the exact opposite position. One megabyte blocks weren’t too small, he maintained even as SegWit’s block size increase gained broad support, they were too big. No increase, but a decrease was needed.

Now, the Bitcoin Knots and Bitcoin Core developer is spearheading an attempt to make such a decrease happen, as a temporary measure. And if social media is any indication, the initiative is attracting more interest than many might have expected it would.

“I don't know if the proposal will be adopted or not, but support has been growing due to the block size becoming more and more apparently a problem,” Luke-jr told Bitcoin Magazine.

Block Size Decrease

Of course, the arguments for decreasing the block size limit are similar to the by now oft-repeated arguments against increasing the block size limit. In short, bigger blocks add to the cost of running a node (making it more expensive for users to enforce the protocol rules), could increase mining centralization (risking censorship resistance), and reduces fee pressure (translating into less hash power security).

The most pressing problem of these, for Luke-jr, is the cost of running a full node. This is perhaps best exemplified by the time it takes to initially sync such a node. Getting up to speed with the rest of the network can take days even on modern laptops with a good internet connection.

“Users acting on that cost by simply choosing not to run a full node is a problem,” Luke-jr said. “When someone does finally attack Bitcoin, it will split the network — full node users on one chain, and light wallet users on the other.”

In case of such a broad scale attack on light wallet users, “a New York Agreement-in-secret,” Luke-jr envisions a worst-case scenario where these users would rather continue to use the invalid chain they’d been defaulting to since the attack, instead of switching back to the original chain.

“Which side prevails inevitably depends on the economic pressure of users of each chain. If most people are using light wallets, then full node users will lose out, and the invalid chain effectively becomes simply a hard fork to Bitcoin,” he argued, leaving little room for nuance. “That means all protocol rules are open to change, including the ones that forbid inflation, theft, etcetera.”

Following Luke-jr’s reasoning, Bitcoin is well into the danger zone already, as relatively few users rely on full nodes to accept payments. And it may be getting worse. Bitcoin’s blockchain grows each day, and while Moore’s Law and similar trends of computational improvements negate the associated problems with this growth to an extent, the Bitcoin Knots lead maintainer thinks technological progress is not yet keeping up. (It’s no exact science, but the drop in reachable node count over the past year could suggest that the blockchain size is indeed becoming a problem for more users — then again this node count is up over the past two years.)

On the flip side, the main argument against smaller blocks is that it would limit the number of transactions the Bitcoin network would be able process, which increases fee pressure, and could out-price certain use cases. (Instead of running full nodes, users may opt to rely on custodial services to save on fees, arguably making matters worse — not better.)

But with the development of the Lightning Network making noticeable progress, proponents of a block size limit decrease believe this downside is largely mitigated. Users would be incentivized to migrate to the overlay network for fast and cheap transactions, furthering its growth and taking the load off Bitcoin’s blockchain at the same time.

The Plan

As the initiative is still in its early stages, it’s not yet set in stone what the potential block size decrease would look like, exactly. Even the desired limit isn’t settled on, though it would most likely be brought down from the current theoretical maximum of almost four megabytes to a theoretical maximum of two or less. (This would, in reality, result in even smaller blocks; closer to one megabyte.) However, if this were to be achieved, the measure would be designed not to be permanent, so that an increase back to the current limit wouldn’t be too difficult later on.

There are at least three rough ideas of how a block size decrease could be achieved.

The most notable proposal is a user-activated soft fork (UASF), similar to BIP148, the initiative to trigger SegWit activation in 2017. On the same date as two years ago, August 1, users would enforce the stricter rules for five months, incentivizing miners to comply. If a majority of miners (by hash power) go along, even non-upgraded users would remain compatible with the new rules; they’d just see smaller blocks than previously allowed. A UASF is a risky strategy, however. If less than half of all miners go along, the blockchain could “split” between upgraded and non-upgraded users.

Alternatively, miners could impose a smaller block size limit themselves as a soft cap. Soft caps are non-binding limits that miners put on the blocks they mine and were used particularly throughout the first years of Bitcoin’s existence. (Past soft caps were consecutively 250, 500 and 750 kilobytes, as recommended by Bitcoin developers.) This would be a much safer solution but would require that miners reject transactions and, thus, leave transaction fees on the table for each block they mine.

As a third option, proposed by Luke-jr, Bitcoin users could limit the size of blocks by making their transactions artificially “heavy.” Under Bitcoin’s protocol rules, these transactions would be counted as if they were larger than they actually are, which means blocks would fill up faster with less actual transaction data. This change wouldn’t require any protocol changes; wallets could offer it today. These transactions do, however, require individual users to choose to “overpay” on fees relative to regular transactions. (That’s assuming miners act economically rationally and charge extra to include the heavy transactions.)

Block Size Debate Fatigue

Some notable proponents of Luke-jr’s initiative include Bitrefill CCO John Carvalho, Block Digest cohost Shinobi and JoinMarket developer Chris Belcher. Yet all of them would only want to go through with the effort if it gains broad backing. That also goes for Luke-jr himself: “Soft forks like this need a lot of community support,” he said.

But so far, support within the Bitcoin community appears to range from lukewarm (no pun intended) to skeptical to outright dismissive. Other than Luke-jr, no regular Bitcoin Core contributors have thrown their weight behind the proposal and no Bitcoin company of note has stated support; and while the proposal is generating a bit of buzz on social media and in chat rooms, a majority of commenters still seems to reject the idea.

Even many of those who agree that a decrease would be a technical improvement in and of itself don’t believe it would make too much of a difference. If blocks are smaller for several months or even several years, Bitcoin’s blockchain size will still be large. Whether tomorrow’s new users need to sync two days or three days may not be the deciding factor in whether to use a full node or not. Besides, there are other solutions that could make running a full node more attractive, some of which may well have much more effect. (Though, as Luke-jr points out, none of these solutions exclude also decreasing the block size limit.)

What’s more, years of in-fighting has made the Bitcoin community wary of commencing another block size battle and dealing with all the controversy that comes with it. After a long-fought “civil war,” there appears to be little appetite to invest more time and energy in reviving the struggle on the same parameter — thereby, quite possibly, draining any momentum from the initiative even before it gets well underway.

Indeed, even Luke-jr himself doubts he’ll be the one carrying the initiative to the finish line this time.

“Although I may be the only one popularly pushing it — I don't have time to champion another BIP148, I fear,” he said, noting how exhausting the previous UASF attempt was. “I think the only way it will happen is if the community takes the lead on it.”

This article originally appeared on Bitcoin Magazine.

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Jennifer Robertson, the widow of the late QuadrigaCX exchange CEO, appears to be liquidating and shuffling some estate assets.

When QuadrigaCX founder and CEO Gerald Cotten passed away suddenly in December of 2018 in India, he was allegedly the only person with the knowledge of the exchange’s cold storage keys. In his will, Cotten names Robertson executrix of his estate, as well as endowing her as its primary beneficiary. The exchange waited roughly a month from Cotten’s reported time of death to making his passing public, enough time for his widow to go through probate and transfer the estate’s assets to her name.

Cotten’s will itemizes a host of high-end assets that are now under Robertson’s control. The CEO left his wife his Jeanneau 51 sailboat; an airplane, a Lexus and a Mini Cooper (among other unnamed motor vehicles); and properties at 1021 Lamont Lane, Kelowna, British Columbia, 71 Kinross Court in Nova Scotia, 511 and 512 Ringling Court in Nova Scotia and 34 Little Island and Seaview Drive in Nova Scotia to his widow. He also left $100,000 for the continued care of his two chihuahuas, Gully and Nitro.

According to Canadian news outlet the Chronicle Herald, Robertson has taken out a second mortgage on each of these properties and placed at least two in a trust fund called the Seaglass Trust, a strategic legal move that lawyers told the outlet could add a layer of insulation between the assets and creditors in the ongoing QuadrigaCX litigation. Bitcoin Magazine could not independently validate that the trust exists.

The Chronicle Herald also reports that Robertson has sold the Kinross property for $1.1 million CAD. A source close to the matter, who asked to remain anonymous, told Bitcoin Magazine that they spoke with a real estate agent who claims to have represented Robertson in the house’s sale.

Cotten’s sailboat was also reportedly listed for sale for nearly $500,000 CAD, though the post has since been taken down (archived link here).

Another dozen properties in Halifax valued at roughly $6 million CAD are reportedly under the management of Robertson’s real estate company, Robertson Nova Property Management Inc., according to the Chronicle Herald. Robertson is listed as the company’s director, president/secretary and recognized agent, according to Nova Scotia public records, with the couple’s former Kinross residence listed as its office. In his will, Cotten dictated that his shares in the company are to be jointly shared between Robertson’s mother Carol Terry and her spouse Thomas Beazley.

As reported by Bitcoin Magazine, QuadrigaCX customers report receiving funds from Robertson Nova Property Management Inc. (showing up as RNC Inc., a.k.a., Robertson Nova Property Management Inc., on their bank statements). The deposit confirmation emails for these payments include reply-to lines with one of two emails believed to belong to Jennifer Robertson. If Robertson was involved with the company’s operations, that would contradict her sworn affidavit that she was not implicated in its dealings during Cotten’s life.

This article originally appeared on Bitcoin Magazine.

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The Wyoming state government has been expanding its status as a hub for crypto and blockchain technology by passing several new bills this February.

According to Wyoming-based blockchain advocate Caitlin Long, the state of Wyoming has recently passed resolution SF0125 on February 14, 2019, claiming that Wyoming “law recognizes property rights in the direct ownership of digital assets.” The bill plainly states “that digital assets are property within the Uniform Commercial Code” and goes on to elaborate some of its ramifications.

Long gave a succinct rundown of the bill’s most salient points, stating that “In other words, you're not forced to own digital securities through an intermediary. Blockchain tech enables direct ownership of assets, and now the law does too.” Since property law in the United States is in the hands of state jurisdiction, this new step is not only safe from the federal government but also can serve as a model for other states.

“It makes perfect sense that Wyoming is the epicenter of blockchain law in the US,” said Long, a Wyoming native. “That's also why institutional investors, which are prohibited by federal law from directly owning the assets they manage, can rest assured that Wyoming's digital asset custodians are actually solvent.”

This is not the only accomplishment made by pro-crypto voices in Wyoming, however. On February 2, 2019, the Wyoming State Senate also passed a bill updating the classification of crypto assets, including a clause to formally label them as currencies.

According to the text of the bill, crypto assets can be considered to have three different statuses for legal purposes: digital consumer assets, digital securities and virtual currencies. All three of these definitions are specifically registered as personal property rather than private property, formally upholding a stance that other jurisdictions overseas and abroad have taken.

More significantly, however, the bill also further elaborates on the specific terms and conditions for each of these three statuses. In addition to the respective classifications of “general intangibles” and securities, the bill also states that “virtual currency is intangible personal property and shall be considered money.”

In redefining the legal status of crypto in this way, it formally opens up the possibility for ordinary citizens to treat crypto as an actual currency on a daily basis. This, in turn, could provide the impetus for a more comprehensive tax code or new business use cases.

Wyoming has been cultivating a reputation as a major crypto haven in the United States, in a bid to angle itself as the blockchain hub of the nation. In addition to enabling blockchain into stock certificates with bipartisan support in January 2019, Wyoming has also helped make banking laws more friendly for blockchain companies last December. Many Wyoming legislators are evidently, at the very least, sympathetic to making blockchain a new Wyoming industry and further friendliness can be expected in the future.

This article originally appeared on Bitcoin Magazine.

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A group of lawyers from some of Canada’s top law firms convened in a court in Halifax, Nova Scotia, today to secure the right to represent creditors in the ongoing QuadrigaCX litigation. By the end of the hearing, the presiding judge wouldn’t make a decision on which firm would play counsel for QuadrigaCX’s clients, though he promised a decision within the week.

“The decision to delay appointment of representative counsel is a sound one. The Court needs to be able to select the right firm that can present Canadians across the country with expertise and in a cost-effective manner. Most users are in British Columbia and Ontario and so firms with solid representation there would be key, so that customers from those provinces have access to the process,” Christine Duhaime of Duhaime Law told Bitcoin Magazine.

During the session, the Honorable Justice Michael Wood heard testimonies from the four law firms that creditors have turned to for counsel, namely, Bennett Jones LLP; Osler, Hoskin & Harcourt LLP; McInnes Cooper LLP and latecomer Goodmans LLP.

Jack Julian, a reporter for Canadian news outlet CBC, live-tweeted the courtroom proceedings, tallying up a total of 18 lawyers who were present at the hearing. One of these, Maurice Chiasson, represented QuadrigaCX while another represented Ernst & Young, the firm that has been appointed monitor over the case; the rest represented some 200 clients affected by the exchange’s inability to honor withdrawals. These clients reportedly have $50 million CAD tied up in the exchange in the aftermath of the death of its founder and CEO, Gerald Cotten. The $50 million CAD represented today is just a piece of the $250 million CAD debt that the exchange owes its customers.

“There are many complicating factors in this motion,” notes blockchain lawyer Chetan Phull of Smartblock Law. “The ‘creditors’ are spread out all over the world, QuadrigaCX is running low on funds for its defense, and Justice Wood has one week to decide who will represent all the creditors. This must be a difficult decision for Justice Wood. Relevant considerations will likely include competence with cryptocurrency and international resources. The first factor will be important to address solvency matters as they relate to the accessibility of various cryptocurrency reserves of QuadrigaCX. The second factor will be important to cost-effectively triage client-intake and evidence management for a litigation with such a global scope.”

“Justice Michael Wood says all contenders are ‘eminently qualified’ to be representative counsel. They all claim to represent similar numbers of clients with similar total losses. He says he ‘won’t be flipping a coin’ and will have to analyze the submissions closely,” Julian tweeted.

One of the firms, Goodmans, which Julian says has a client with a $1 million claim on the exchange, suggested creating a “steering committee” of seven individuals, which would consist of two lawyers from the other three law firms competing for representation and one from Goodmans. The committee would then be in charge of appointing legal counsel for the affected creditors. Justice Wood ultimately dismissed this proposal, saying it would amount to the firms having to “duke it out,” tweeted Julian.

According to Julian, Raj Sahni, an attorney for Bennett Jones, lambasted the use of online chat rooms as “completely inappropriate” for disseminating information in this case. In the fallout after Cotten’s death, Reddit (particularly the subreddit QuadrigaCX2) has become a hotbed of activity for QuadrigaCX customers to swap information, air grievances and cook up what most would consider conspiracy theories.

To cut through the noise and give this information legitimacy, one firm, Miller Thomson, suggested curating a website that would aggregate creditor information and answer questions these affected users have in public or private.

The proceedings highlighted that most of the creditors are individuals with fewer than $50,000 CAD in the exchange. These affected users are already down significant capital, and the legal counsels stressed the importance of making this process as frictionless as possible to mitigate legal costs for the already cash-strapped creditors. The monitor, Ernst & Young, has proposed a $100,000 CAD cap on fees beginning today, which would exclude fees calculated to this point.

Even as lawyers are seeking to expedite the counsel appointment process to the capital benefit of their representatives, it became apparent early on that Justice Wood might not reach a decision today. The case is murky and unconventional, he said, and Julian tweeted that the robustness of each law firm contending for legal counsel hasn’t made “life any easier” for the judge regarding his decision.

“Wood says this [is] an odd situation. We don’t have secured and unsecured creditors, third party suppliers, employees etc. Only clients. So it’s unlikely there will be parties clamouring for changes on the next court date of March 5,” Julian wrote.

After a midday recess, the court reconvened and Justice Wood revealed that he would not decide on representative counsel today, as choosing between the four will be difficult. While he said that each is "eminently qualified," Chetan Phull of Smartblock Law said that the ideal counsel will have to have a stellar report card for handling the technological nuance and international breadth of the case.

"Relevant considerations will likely include competence with cryptocurrency and international resources. The first factor will be important to address solvency matters as they relate to the accessibility of various cryptocurrency reserves of QuadrigaCX. The second factor will be important to cost-effectively triage client-intake and evidence management for a litigation with such a global scope.”

Outstanding Issues

At the end of the hearing, the court also addressed a number of outstanding issues in the case, including the absence of $30 million CAD worth of bank draft notes that QuadrigaCX claims that it is owed by its payment processing partners. QuadrigaCX is making haste to secure these funds as most of the $300,000 CAD it has in its possession for legal fees are nearly depleted.

“The Court learned today that the advisors are almost out of the money allocated, having spent $250,000 in fees in a short time. It remains unclear how additional funds will be secured because there was only $300,000 set aside that was a secured debt to Mr. Cotten’s widow, approved by the three new directors, the Court heard. I think they will have to solve the cash crunch soon by securing banking relationships quickly to deposit the over $20M in bank drafts they said they have,” Duhaime commented to Bitcoin Magazine.

As monitor, Ernst & Young commented that it was close to reaching deals with some of these nine processors, though the firm was vague on the progress it has made toward decrypting Gerald Cotten’s hardware, which allegedly holds the keys to the company’s inaccessible cold storage, or in retrieving the $460,000 CAD that QuadrigaCX “inadvertently” sent to one of its cold wallets on February 6, 2019.

Bitcoin Magazine recently broke news that multiple QuadrigaCX users have reported receiving deposits from Robertson Nova Consulting Inc., a company, CBC claims, that Gerald Cotten’s widow, Jennifer Robertson, presides over as president, secretary and director. Bitcoin Magazine’s sources commented that email addresses appearing to belong to Robertson were listed on the reply-to lines of deposit confirmations. The same sources also told Bitcoin Magazine that they had received mass amounts of cash, at times amounting to thousands of dollars, in the mail as part of the withdrawal process.

With additional notes from Jessie Wilms

This article originally appeared on Bitcoin Magazine.

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Even in a bear market, Morgan Creek Digital has no problem swimming upstream.

The crypto asset management firm just bagged a $40 million dollar investment and what appears to be the first blockchain/crypto investment by a major pension fund. Two pension plans from Fairfax County, Virginia, the $1.43 billion Police Officer’s Retirement System and the $3.9 billion Employee’s Retirement System, were the lead investors in what was originally projected to be a $25 million dollar raise. Besides the two funds, a hospital system, an insurance company, a private foundation and a university endowment also invested in the raise.

An offshoot of Morgan Creek Capital Management LLC, Morgan Creek Digital is a cryptocurrency asset management and investment firm founded by Anthony Pompliano, Jason Williams and Mark Yusko, and it has invested in such industry heavyweights as Coinbase and Bakkt.

With this latest influx of capital, Morgan Creek Digital will invest in early seed-round crypto and blockchain startups, as well as digital tokens and other cryptocurrencies.

The raise is the largest for a crypto firm in 2019, and it’s one of the largest to occur during a bear market that is going on two years now. Speaking to Bloomberg, Pompliano said that the price is just a temporary distraction from what could be a lucrative long-term game, and institutions are starting to take notice.

“There’s a belief in the institutional world that if the industry will be around for a long time, it will be very valuable. The smart money is not distracted by price but looks at the long-term trends, and believes they’re betting on innovation as a great way to deliver risk-mitigated returns.’’

The Chief Investment Officer of one of the raise’s participating pension funds corroborated Pompliano’s claim that institutions are attracted by the digital assets market. In a statement on the raise, Chief Investment Officer of the Fairfax County Police Officer’s Retirement System Katherine Molnar commented, “Blockchain technology is being applied in unique and compelling ways across multiple industries.”

Molnar continued, “We feel it is important to be opportunistic and are excited to participate in this emerging opportunity, due to the attractive asymmetric return profile that it represents.”

At the time of publication, Morgan Creek had not responded to Bitcoin Magazine’s request for comment.

This article originally appeared on Bitcoin Magazine.

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According to the latest court documents in the ongoing QuadrigaCX case, the exchange sent roughly $470,000 CAD (approximately $355, 000 USD) worth of bitcoin from a hot wallet to a cold-storage wallet on February 6, 2019.

Ernst & Young’s first report as monitor of scrutinized Canadian bitcoin exchange QuadrigaCX (QCX) complicates the story the exchange has given for its lack of access to company funds following the death of its founder and CEO, Gerald Cotten.

The court document states, “On February 6, 2019, Quadriga inadvertently transferred 103 bitcoins valued at approximately $468,675 to Quadriga cold wallets which the Company is currently unable to access. The Monitor is working with Management to retrieve this cryptocurrency from the various cold wallets, if possible.”

Regarding the liquidation process for distribution of QCX funds to the exchange’s users, the report says that Ernst & Young has established a “Disbursement Account” per the Nova Scotia court’s orders, “and [it] received $150,000 from Ms. Jennifer Robertson” (Cotten’s widow) to kickstart the account.

The document continues to clarify that the exchange’s remaining hot-wallet funds (some $902,000 CAD, of which $700,000 CAD is in bitcoin, $130,000 CAD in ether and the rest in bitcoin fork coins and litecoin) will be transferred to cold storage under Ernst & Young’s management.

In an affidavit that comprises part of the ongoing legal proceedings in the Court of Nova Scotia, Robertson swore that the exchange had no access to the cold storage because the keys and passwords are stored in one of Cotten’s encrypted wallets.

According to the document, Ernst & Young has also seized Cotten’s computer hardware and accessories, which Robertson originally turned over to retired cybersecurity professional Chris McBryan of McKalian Sensors Inc. to crack.

“The devices taken into custody from Mr. McBryan include two (2) active laptops, two (2) older model laptops, two (2) active cell phones, two (2) older ‘dead’ cell phones and three (3) fully encrypted USB keys. … The Monitor’s forensic group is currently working with Mr. McBryan to better understand actions that have been taken in respect of the devices and what information has been obtained from the devices to date to determine what forensic next steps will be employed. In addition, the Monitor was made aware of and took steps to retrieve Mr. Cotten’s desktop,” the report reads.

Recovering Lost Funds

The document also confirms that Ernst & Young has contacted nine of the known payment processors that served as QuadrigaCX’s makeshift banking partners. The firm has not yet received the $30 million CAD in bank draft notes that both the court affidavit and the report say are under the auspices of Stewart McKelvey, the law firm representing both Robertson and QuadrigaCX. One of these processors allegedly owes the exchange $25.2 million of the $30 million in bank notes QuadrigaCX holds. Once the banks that these processors work with clear wires for these bank notes, the funds will fall under Ernst & Young’s management.

QuadrigaCX had been using these payment processors as a stand-in for proper banking relationships. As sources close to the matter, who asked to remain anonymous, told Bitcoin Magazine, QuadrigaCX has a long history of problems in maintaining banking relationships, a tribulation best represented by CIBC freezing $25 million CAD of funds associated with the exchange in 2018. This freeze was one of many unhappy incidents that have come to define the exchange, including losing millions in ether in 2017 to a smart contract bug and a reputation for month-long withdrawal times.

Speculation and Rumors

Since Gerald Cotten’s death, wild speculation over QuadrigaCX’s solvency, the identity of a since-distanced cofounder Michael Patryn and whether Cotten is actually dead have surfaced in the community. A purported QuadrigaCX contractor, one of the seven that made up the company’s employee structure until recently, posted a reddit AMA on r/QuadrigaCX2 with potentially damning accusations that Cotten and Robertson worked in tandem to scam the exchange’s users. These accusations remain unsubstantiated thus far.

Canadian lawyers will convene on February 14, 2019, in Halifax in a bid to represent some 111,000 users affected by the exchange’s misfortune, Bloomberg reports. In its February 5 ruling, the Court of Nova Scotia granted QuadrigaCX creditor protection, guarding it from further court action until the exchange and Ernst & Young are able to investigate its financial situation.

This article originally appeared on Bitcoin Magazine.