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Paxos confirms it is responsible for an erroneous $500,000 Bitcoin transaction

The account that paid $500,000 to move $2,000 worth of Bitcoin was a Paxos server, the company said.

The account that paid more than $500,000 in fees on Sept. 10 for a Bitcoin (BTC) transfer belonged to Paxos, according to a Sept. 13 company statement. Paxos stated that end users were not affected and that all user funds are safe. Paxos is best known as an issuer of stablecoins, including PayPal USD (PYUSD) and Pax Dollar (USDP), but it also runs a cryptocurrency exchange that trades Bitcoin.

The statement comes after Twitter users speculated that PayPal may have been responsible for the transaction, due to a related wallet account that was identified by analytics platform OXT as belonging to PayPal. A Paxos representative told Cointelegraph that PayPal was not responsible, as the error was theirs, stating:

   “Paxos overpaid the BTC network fee on September 10, 2023. This only affected Paxos corporate operations. Paxos customers and end users are not affected and all customer funds are safe. This was due to a single transfer error and has been fixed. Paxos is in contact with the mining company to recover the funds.”

The erroneous transaction was first discovered on September 10, shortly after it occurred. According to blockchain data, the sender paid fees of approximately 20 BTC (more than $515,000 at the time) to send just 0.07 BTC (worth less than $2,000 at the time). At the time, Casa Wallet co-founder Jameson Lopp stated that the sending account “looks like an exchange or payment processor with faulty software” as it had made more than 60,000 transactions at the same address.

The block containing the transaction was confirmed by the Bitcoin mining pool F2Pool. On September 10, the fund administration offered to return the funds to the sender of the transaction if the complaint was filed within three days. Otherwise, the exorbitant fee would be paid to the pool’s hash power contributors.

Before Paxos made its statement, Bitcoin enthusiast Mononaut claimed on Twitter that PayPal was responsible for the transaction.

According to Mononaut, the sender account bc1qr35hws365juz5rtlsjtvmulu97957kqvr3zpw3 exhibited behavior that “very closely resembles the behavior of a now-inactive wallet [bc1qhs3gptkxem5y7yaq2yg0un2m8hae6wt87gkx4n].” This inactive address has been marked as “Paypal” by blockchain analytics platform OXT.

To add further evidence to his hypothesis, Mononaut observed that this old wallet address transferred its funds to the new address through an intermediary account. Bitcoin blockchain data shows that the old address called “Paypal” by OXT transferred approximately 18.5 BTC to the address bc1qlm0xlahpysq2v9yh5rhcc430xjz3xknqqnyvaf on June 19. That account then sent around 5.37 BTC to the new address which then made the wrong transaction. Lopp shared the thread and wondered aloud whether PayPal would request his funds back.

Related: Coinbase Will Integrate Bitcoin Lightning Network: CEO Brian Armstrong

Paxos later issued a statement confirming that the error was theirs, not PayPal’s.

Paxos is not the first cryptocurrency user or company to pay potentially thousands of dollars in fees due to a bug. In 2019, an Ethereum user lost over $300,000 by mistakenly pasting values into the wrong fields. Fortunately for him, the mining pool agreed to return 50% of the funds he lost. In 2020, another Ethereum user mistakenly paid $9,500 for a $120 trade. The user claimed the error “destroyed [his] life.”

In its statement, Paxos stated that it has contacted the mining company that confirmed the transaction and is trying to recover the lost resources.

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Institutions Are Moving Into Cryptocurrencies: Retail Investors Beware

As the queue for a bitcoin spot ETF grows longer, institutions are acutely aware that the time to finally get into bitcoin is drawing near. Are retail investors equally aware?

Will cryptocurrencies fall sharply?

A casual glance at cryptocurrency on Twitter or any other social media channel is enough to “confirm” that bitcoin and the cryptocurrency market are going to drop sharply and hit lows again or even go beyond them.

Rottweiler Gensler and his Securities and Exchange Commission (SEC) may have had some disappointments in their attacks on some of the biggest players in the crypto space, but the regulatory web is catching up and surely crypto can be stifled. enough to stop them in their tracks. …accompany and allow the legacy monetary system to continue its dominance without restriction.

Institutions are not stupid

However, Wall Street may be crooked, but money goes to money and institutions have finally realized that getting into Bitcoin is a no-brainer.

Of course, the likes of Blackrock and its other giants could find some way to try to manipulate bitcoin, just as gold and silver banks have done decade after decade.

Relatively small positions in the futures markets are leveraged to go short and force the price down, allowing banks to buy at lower prices and then rinse and repeat, year after year after year.

However, Bitcoin is a different animal, and manipulators should be careful, as their paper positions, with no ties to the underlying asset and cash-settled, are likely to be wiped out as Bitcoin is steadily bought.

The stars are aligning

Wall Street shenanigans or not, these institutions are still coming, and the SEC being forced to award the cash ETFs could come at the same time the US presidential race gets serious—and just right. when Bitcoin approaches its halving.

A monetary policy easing from the Fed and a bitcoin supply shock are potential factors in a bitcoin price explosion that will take the number one cryptocurrency to the top of its next cycle, perhaps in 2025.

Retail investors may be forced to pull out

No doubt retail is suffering badly as consumer prices remain unbearably high, house prices are falling, mortgages need to be refinanced (in the UK) at what could be 2-3 times current rates and jobs are declining as fast as AI. it is improving.

Bitcoin was created as an alternative asset to fiat currencies, which are controlled by central banks in our indebted monetary system. The mainstream media wants us to believe that all cryptocurrencies will eventually go to zero, and many of them could, but the reality is that “all” fiat currencies will go to zero and there is absolutely no question that this has to happen. mathematically.

On the other hand, Bitcoin is probably totally unstoppable right now. Holding $BTC and averaging is perhaps a good way to go. Time horizons should also be long, as widespread adoption may still take a few years.

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South Korean City Announces Plan to Seize Crypto Assets from Local Tax Dodgers

The government of the city of Cheongju, located in central South Korea, intends to confiscate virtual assets, such as Bitcoin, from tax evaders.

According to a local media report on Aug. 22, city officials sought the cooperation of seven cryptocurrency exchanges, including Upbit and Bithumb, to punish these violators.

These exchanges were required to report the cryptocurrency holdings of 8,250 people, each of whom owed more than 1 million South Korean won ($747) in local taxes.

Upon completion of this task, the Cheongju City authorities will review the acquired data before seizing and liquidating these assets to obtain the outstanding taxes.

Crypto assets as a tool for tax evasion in South Korea

Due to the anonymity that comes with cryptocurrency, these assets are often labeled as a weapon for tax evasion.

Once again, this notion was highlighted by the Cheongju city government, which claimed that cryptocurrencies are commonly used to hide income in South Korea, hence the reason for this asset forfeiture initiative.

Interestingly, this would not be the first time that such an event has taken place in a South Korean city. In 2022, the Cheongju authorities requested a report on the cryptocurrency holdings of 16,000 people before proceeding to seize 68 million won ($51,000) from 17 investors.

In South Korea, seizing crypto assets to evade taxes is a common practice, as the country’s Supreme Court considers these assets to represent legitimate property interests and therefore subject to confiscation by national authorities.

According to a report on the “State of Seizure of Virtual Assets” submitted to the South Korean National Assembly in September 2022, the Asian country’s tax regulators seized 259.79 billion won ($194.15 million) in back taxes. between 2021 and 2022.

Of these values, the amount of assets seized in Gyeonggi-do province accounted for the highest value, with 53.04 billion won ($39.65 million), followed by the country’s capital, Seoul, with 17.84 million won. won ($23.24 million). .

Crypto regulations continue to rise in South Korea

In other news, the South Korean government continues to introduce more regulations to rid its crypto market of all illegal activities that are supposedly trying to protect the interests of users.

South Korea is considered one of the most formidable cryptocurrency hubs in the world, and data from Coinhills shows that the Korean won is the second most traded national currency for Bitcoin, after the US dollar.

In July, the country’s government established a joint crypto-crime task force made up of 30 people from various agencies, including the National Tax Service, Financial Supervisory Service, etc.

In addition, to improve transparency in the crypto space, the country’s Financial Services Commission recently announced that companies trading cryptocurrencies will be required to disclose their holdings in their financial statements from 2024 onwards.

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Coca Cola Introduces New NFT Collection on Coinbase Blockchain

As soon as the cryptocurrency exchange Coinbase launched the Layer-2 Base platform last week, the American multinational Coca-Cola announced its new NFT collection on the platform.

Coca-Cola’s NFT ‘Masterpiece’ collection consists of some iconic artworks by emerging talents in the digital and on-chain art space. Timeless art treasures like “The Scream” by Edvard Munch and “Girl with a Pearl Earring” by Johannes Vermeer share the space seamlessly with modern pieces by expert artists like Aket and Vikram Kushwah.

These works now take on a new dimension as they are made into collectibles on the blockchain, open to art enthusiasts participating in the Onchain Summer event. Using “Masterpiece”, Coca-Cola® acts as a curator, bringing together stories from around the world and celebrating different types of art.

The Coca-Cola® ‘Masterpiece’ is more than just an art collection. It represents how art, technology and people come together in the chain. By bringing it into the digital world, Coca-Cola® is showing other companies how to connect with the digital age. This collection goes beyond the usual art galleries and reaches people all over the world.

French artist Aket said: “Coca-Cola® is a very important generational milestone. Your ads encourage us to live our dreams every day.”

Coinbase Blockchain Base

Last week, on August 9, cryptocurrency exchange Coinbase released its main base to the public. The Coinbase Base platform hosts over 100 decentralized applications (dApps) and service providers, while also addressing the challenges that users would face with the Ethereum blockchain network.

The Base platform is based on Optimism’s OP Stack software and works as a stacked network. This allows you to handle transactions separately from the main Ethereum blockchain. The aim is to provide a more efficient platform for dapps, making use of Layer-2 solutions. These solutions aim to address the scalability and expense challenges associated with blockchain backbone networks, reflecting a broader industry trend.

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Bank of America predicts that PYUSD will not be easily adopted

Bank of America reacts to the launch of PayPal’s PYUSD stablecoin, pegged to the US dollar, arguing that the asset is unlikely to be widely used, at least not anytime soon.

PayPal’s recent groundbreaking announcement about the launch of its US dollar-denominated stablecoin PYUSD has sparked much criticism around the world. While it seems like a significant step toward cryptocurrency adoption, some say PayPal won’t be very successful any time soon.

One of the largest banks in the US, Bank of America, outlined the main reasons why PayPal USD is unlikely to see immediate adoption in its recent research report.

Competing against CDBCs

First, Bank of America analysts Alkesh Shah and Andrew Moss explained that PayPal’s stablecoin could face intense competition in the market:

“Longer term, we expect PYUSD to experience additional hurdles to adoption as competition from central bank digital currencies (CBDCs) and yield stablecoins increases.”

It is true that several countries are actively exploring Central Bank Digital Currencies (CBDCs) that could compete with stablecoins, as both are based on similar technologies and are pegged to fiat currencies. Only this year, countries like Brazil, South Korea, Russia, Japan, the United Kingdom, among others, have reported news about the launch of their CBDCs. There is speculation that the US may also be working on its CBDC, although some of the country’s presidential candidates have claimed to be against it.

Competing against other stablecoins

Also, there are many other stablecoins that PYUSD will have to compete with. Profitable stablecoins are now especially attractive to investors, according to Bank of America:

“Investors may have been fine holding non-yielding stablecoins like USDT and USDC when rates were close to zero, but it is likely that yielding stablecoins will become increasingly available and attractive with short-term rates above 5%.” .

Dealing with regulatory scrutiny

Finally, the analysts also suggested that PayPal could face regulatory problems if traditional banks are prohibited from issuing stablecoins:

“Investors are likely to be indifferent to the stablecoins they own, as long as the stablecoins are perceived as safe and accessible on major trading platforms. We do not expect the launch of PYUSD to lead to accelerated regulatory clarity, as stablecoin issuance does not change the systemic risk for traditional markets, but stablecoins could face regulatory hurdles if nonbanks are prevented from issuing stablecoins. ”.

Just one day after PayPal unveiled its stablecoin project, the US Federal Reserve released new guidelines on the use of “dollar tokens” by US banks. According to the notice, to engage in any type of stablecoin-related activity, US banks will now need to receive a written supervisory no objection from the Federal Reserve.

Meanwhile, cryptocurrency scammers didn’t wait long to try to cash in on the big news and flooded decentralized exchanges with fake PayPal tokens.