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Shock: Ethereum Miners Against Proposal to Reduce Block Rewards by 75%

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A new Ethereum improvement proposal (EIP) has been met with sharp criticism from miners suggesting those behind the proposal are less interested in the network’s security and more focused on investors’ interests.

EIP-2878 proposes that block rewards be reduced by 75%, from 2 ETH per block down to 0.5 ETH. The rationale behind this EIP is to bring Ethereum’s inflation rate closer into line with Bitcoin’s (BTC) and to preserve ETH’s purchasing power.

Proposed on Aug. 11, ConsenSys Managing Director John Lilic, and Ledger’s Global Head of Client Success Jerome de Tychey, it was shared along with an in-depth explanation on the Ethereum Magicians forum where developers and miners alike can discuss its validity.

Miners, specifically those using GPUs, were quick to call out the EIP as the block reward drop was more than double the percentage of the network’s previous reduction, and said a 51% attack would be a possible result.

Too much, too soon

PegaSys Product Manager Time Beiko believes “this is much too dramatic of a change, given we’ve gone from 5 to 3 (-40%), then 3 to 2 (-33%), now you are going from 2 to 0.5 (-75%).”

“The biggest consideration, in my opinion, should be the security of the network (i.e. how do we ensure the likelihood of 51% attacks remains low, how do we keep a diverse set of miners on the network, etc.).”

Another user responded to the proposal saying, “ASICs are highly profitable compared to GPUs. Any reduction in block rewards without an algo change will remove the rest of the GPUs from the network resulting in ASICs totally controlling the network.”

Bit Capital Group CEO and co-founder Jimmy Thommes explained that Ethereum shouldn’t be trying to ape Bitcoin’s inflation rate as it was an older network that was trying to achieve different things. Not to mention, the proposal made miners feel like they were being used:

“It feels really bad to be treated as a necessary evil to be paid out the minimum possible to incentivize us to keep our lights on just long enough to make the transition to 2.0 work.”

Principle is fine, details are the issue

The majority were not opposed in principle to a block reward drop as Ethereum doesn’t have an in-built halving mechanism like Bitcoin, and thus relies on EIPs to control inflation with proposed reward reductions. But most suggested a drop to 1.5 or 1 ETH was more reasonable. One Reddit user said that although miners were earning plenty in 2017, that shouldn’t influence current earnings:

“Did they let the miners make way too much money in 2017 and 2018? You bet. Does starving them now make that ok? I don’t really think so.”

Another user added that the proposal was ill-timed as Tether’s transition to OMG will “drastically reduce fees paid to miners.”

The proposal is still relatively new and has little community support, according to Ethereum developer Hudson Jameson who suggested the proposal should be considered in light of EIP-1559.

Source: https://cointelegraph.com/news/shock-ethereum-miners-against-proposal-to-reduce-block-rewards-by-75

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Ripple Plans To Cash Out 33% Of Its MoneyGram Stake With A Significant Profit

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  • The San Francisco-based payment protocol has filed a document on Friday with the US Securities and Exchange Commission (SEC). It reads that Ripple Labs has entered into an agreement with MoneyGram, which entitles Ripple to sell up to 4,000,000 shares of common stock.
  • Ripple’s option to sell these shares will expire “upon the earliest of March 31st, 2021, the time at which the maximum amount shall have been sold, or the occurrence of certain other customary events affecting the issuer.” 
  • CryptoPotato reported last year that Ripple and MoneyGram announced a strategic partnership. The initial term of the agreement was for two years. Ripple had agreed to provide a capital commitment amounting to $50 million in exchange for equity through the two-year period.
  • As per the SEC filing, Ripple owns 6.22 million shares of the giant money transfer company (or 8.6% of shares outstanding). However, the blockchain company has a warrant to buy up to another 5.95 million shares, amounting to a total equity position of 12.2 million shares or 17% of MoneyGram’s shares outstanding).
  • With the initial investment in 2019, Ripple purchased the MoneyGram shares at 4.10 per stock, which was a significant premium to the market price. 
  • Nevertheless, MoneyGram’s stocks (MGI) have surged in 2020, closing Friday’s session at $7.42. As such, Ripple can cash out with an 80% profit, despite the initial premium.
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Source: https://cryptopotato.com/ripple-plans-to-cash-out-33-of-its-moneygram-stake-with-a-significant-profit/

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South Korea To Postpone Previously Planned Crypto Income Tax

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Lawmakers in Korea are planning to postpone a recently considered tax on crypto assets profits. Reports say the tax rule delay will be about three months – instead of October 2021, January 2022.

The New Crypto Income Tax Rule To Wait Until January 2022

According to a recent media report, the South Korean congress plans to put off the recently considered cryptocurrency income tax rule. A planning and finance committee of the National Assembly has issued a report, which proposes the necessity of implementing the crypto income tax rule from at least 2022.

A few months ago, in July, a report stated that South Korea’s Minister of Finance and Economy believes that the country should come up with a tax on cryptocurrency trading and investing. Back then, he added that South Korea has been in discussion with other countries about introducing a new digital law.

In July 2020, the country’s Ministry of Economy and Finance amended its tax code, where it included the plan for charging residents a 20% tax on gains from cryptocurrency trading, which are worth more than 2.5 million Korean won (about $2,000).

Lawmakers in the National Assembly are to approve the Government’s plan, which was to carry into effect the cryptocurrency income tax rule from October 2021.

Reason For The Delay – Time Is Tight

As per the media report, the reason for the postponement of the crypto tax law is based on some concerns, raised by local crypto exchanges. They have claimed the lack of time to build their proper tax reporting system and infrastructure, needful for the process to begin.

The so-called “Specific Financial Information Act” would be enforced from March next year, so crypto exchanges have to complete the necessary reporting system by September 2021 for verifying their real names of deposit withdrawal accounts.

As CryptoPotato reported, South Korea announced the planning of the crypto income tax in June this year. The Asian country went through some different views on how and whether it should tax profits from cryptocurrency. Firstly, at the beginning of 2020, the Ministry of Economy and Finance did not consider that digital asset trading gains as taxable income. A month later, another local report said the Ministry believes that the nation could start label cryptocurrency trading profits as “other income.”

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Source: https://cryptopotato.com/south-korea-to-postpone-previously-planned-crypto-income-tax/

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Bitcoin and Crypto Worth $4 Billion Seized From PlusToken Ponzi Group

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Chinese authorities seized around $4 billion worth of bitcoin and other cryptocurrencies from the notorious crypto Ponzi group PlusToken. This comes after the Chinese police arrested the core team running the scheme in July.

Around $4 Billion Worth Of Bitcoin And Crypto Assets Seized

According to CryptoPotato’s previous report on the PlusToken saga, the crypto shysters (27 key operators) were arrested by the Chinese police in July earlier this year. Along with them, the police also arrested 82 other members.

Now according to the latest reports, Chinese authorities have confiscated close to $4 billion worth of bitcoin and cryptocurrency holdings from PlusToken operators. Estimates say that they duped much more than this amount by beguiling investors.

Cryptocurrencies collected from users as a joining fee were valued at at least 14.8 billion yuan ($2.3 billion) as of June 2019…

The document released by the ruling court also mentioned the details of the seized crypto stash: 94,775 BTC, 833,083 ETH, 487 million XRP, 79,581 BCH, 1.4 million LTC, 27.6 million EOS, 74,167 DASH, 6 billion Doge, and 213,724 USDT.

On a rough calculation, the value works out to be a little over $4 billion. As per the court’s observations:

The platform had no actual operations or functions. The accused used the digital assets for expenses including paying employees, and sold some of them to buy properties and luxury cars for themselves or relatives.

Also, a few organizers of the PlusToken scam hid and transferred bitcoin and crypto-assets worth about 150 million yuan (~$23 million) at the time. This resulted in some losses, according to the document.

The Scam Story Continues With COVID-19 And DeFi

It doesn’t come as a surprise that the cryptocurrency space is scam-laced. The modus operandi of scammers has changed, though. The onset of COVID-19 scammers motivated them to milk the pandemic and fleece unsuspecting investors dry.

Perpetrators used various methods, such as impersonating popular health and charity organizations. Despite the visible differences in terms of content and requests, the online robbers asked for payments to be made in bitcoin.

Apart from the above, the cryptocurrency ecosystem’s hottest space (read DeFi) too has become a breeding ground for innumerable scams and Ponzi schemes. As per a recent report, an anonymous DeFi user reportedly lost around $140,000 worth of Uniswap UNI tokens to a yield farming scam.

The above wannabe yield farmer intended to leverage the yield farming hype by putting some of his UNI tokens in UniCats, a new DeFi scheme (like many others). UniCats allowed investors to farm its MEOW tokens, after which they can withdraw their tokens.

But, things didn’t go as planned as malicious codes in the project’s contract allowed the fraudulent developers to withdraw the victim’s UNI tokens. This theft was possible because of an earlier approval grant by Doe for the project to spend an unlimited number of UNI tokens.

The rogue devs made away with 36,000 UNI tokens in two rounds bringing the rogue actor’s loot to about $140,000.

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Source: https://cryptopotato.com/bitcoin-and-cryptocurrency-worth-4-billion-seized-from-top-crypto-ponzi-group/

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