Investors Cameron and Tyler Winklevoss have been ordered to pay back $45,000 in legal fees incurred by entrepreneur Charlie Shrem as part of an ongoing lawsuit that alleges he failed to broker a series of promised cryptocurrency purchases on their behalf.

In the order, filed in the U.S. District Court of the Southern District of New York on Thursday, Judge Jed S. Rakoff ruled Shrem should be reimbursed for a prior court ruling that gave the plaintiffs the ability to seize up to $30 million worth of his assets.

The initial order was rolled back on November 8, at which point Shrem filed a motion to recoup attorney’s fees and related costs to defending the motion.

Lawyers for Winklevoss Capital had attempted to argue Shrem should not recoup the funds for his costs, as he was only ultimately only charged a “de minimis amount” of less than $5. The court, however, ultimately rejected the idea this invalidated Shrem’s claim, though the judge found the requested damages should be reduced by 40 percent on reviewing the charges.

Brian Klein, partner at Baker Marquart LLP, said of the ruling:

“We are glad that the judge ruled for Charlie and ordered WCF to reimburse him for legal fees he incurred in overturning WCF’s approximately $30 million attachment order. This is another big step towards his full vindication.”

Overall, the court filing is the latest in a recent lawsuit that has pitted three high-profile cryptocurrency industry personalities and former business partners against each other in the headlines.

Winklevoss Capital was previously an investor in Shrem’s first startup BitInstant, an early cryptocurrency exchange that was one of the most public before its eventual shut down in 2013. Shrem was later found to have violated anti-money laundering rules during his tenure as CEO, for which he would ultimately serve a one-year prison sentence.

A trial is now set to hear further arguments in the ongoing lawsuit this June.

Winklevoss Brothers – Charl… by on Scribd

Charlie Shrem image via CoinDesk archives

ErisX, a digital assets trading platform, has recruited three top-level officers from major companies in the financial and tech industries.

Announced today, Robert Thrash joined the company as chief operating officer from Barclays, where he spent more than 11 years in various leadership positions. Most recently, he was the global bank’s managing director of agency derivatives services, a business that encompasses over-the-counter (OTC) derivatives clearing, futures execution and clearing and foreign exchange prime brokerage.

Explaining his interest in the cryptocurrency markets, Thrash told CoinDesk:

“Crypto sits at the intersection of technology, finance and regulation. Regulation will continue to evolve and impact this space bringing transparency to the market, which in turn should lead to increasingly active participation by traditional financial intermediaries. As these intermediaries provide market access to new market participants, a whole host of trading technology, crypto-based products and financing solutions will need to be created.”

Meanwhile, ErisX hired Arnold Connell to be its head of infrastructure. Connell hails from YouTube, where he was a senior technical program manager with a focus on the YouTubeTV streaming service. Before that, he spent a decade at YouTube’s parent Google in various roles.

Finally, John Denza left his job as a head of U.S. sales at Pico Quantitative Trading to become ErisX’s business development executive. Prior to Pico, he worked at BATS Global Markets (eventually acquired by Cboe Global Markets) as director of U.S. sales for equities and derivatives.

Gearing up

The hirings come as ErisX is getting ready to launch spot trading for bitcoin, bitcoin cash, ether and litecoin in the second quarter, and futures trading for those assets in the second half of the year. The company is working on obtaining a derivatives clearing organization (DCO) license from the Commodity Futures Trading Commission (CFTC).

“We are leveraging our industry relationships to secure talent and build the most robust, secure and regulated platform for digital assets,” Thomas Chippas, ErisX CEO, told CoinDesk through a spokesperson. “This is the beginning of a new asset class. The leaders in this space are still being developed as are the biggest players still being built.”

In December, ErisX hired Matthew Trudeau, former president of the blockchain startup Tradewind and head of product for IEX (and one of the heroes of Michael Lewis’ bestseller about high-frequency trading, “Flash Boys”) as chief strategy officer.

The same month, the firm raised $27,5 million in a funding round involving Bitmain, ConsenSys, Fidelity Investments, Nasdaq Ventures and Monex Group.

Thomas Chippas image via CoinDesk archives

Someone is poorly impersonating the highly anticipated bitcoin futures trading platform Bakkt in an apparent attempt to bilk people out of their bitcoin.

On Wednesday night, the CoinDesk news team received an email (subject line: “Bakkt News!”) claiming that the platform was set to launch on March 12. The email, sent from a gmail address and written in broken English, further stated that Bakkt would be seeking to raise $50 million in a second financing round and directed readers to a website, bakktplatform.io.

There, prospective investors are invited to register by entering their name and email address. After going through this process, visitors are presented with a bitcoin address to send their money and asked to provide their own address to receive their “profits” from the investment.

As of Thursday morning, no funds had been sent to the wallet.

The site (registered just a week ago through WhoisGuard, a domain owner-obscuring service in Panama, according to a WHOIS lookup) is a fake.

A spokesperson for Intercontinental Exchange (ICE), Bakkt’s parent company, told CoinDesk: “that is not a Bakkt website and we wouldn’t have communicated in that way.”

Further, the email’s claims about Bakkt are dubious at best.

No launch date

For starters, Bakkt has no official launch date right now.

The platform is still waiting on regulatory approval to begin listing its futures product, and the Commodity Futures Trading Commission (CFTC) is nowhere near such an approval.

Indeed, the CFTC has not even published Bakkt’s self-warehousing proposal for comment. Once that proposal is released, the general public will have 30 days to respond. After the comment period ends, the CFTC’s commissioners will likely take a few days to review the feedback before voting to approve or deny the proposal.

In that light, a March 12 launch date would be an aggressive target – and just to be clear, Bakkt has made no such commitment.

Caveat emptor

Even more implausible, however, is the email’s announcement of a “Second Financing Round.”

First, Bakkt just raised $182.5 million at the close of 2018, less than two months ago. And it strains credulity to imagine that a regulated institutional platform would solicit funds from the general public through a website, require just a name and email address to invest (though “company” and “industry” are optional fields on the registration form) and accept bitcoin only.

“We are at the stage of completing the testing of Blockchain on our platform, our tests have shown high results of efficiency and manufacturability using Blockchain technology in contrast to Fiat,” the bogus Bakkt website explains (sorta). “Тhe near future we plan to create the first regulated exchange of the institutional class in a developing industry and much more [sic].”

If that pitch isn’t persuasive enough, the site promises investors a return within three days of the platform’s launch (so by March 15, presumably). Perhaps appealing to FOMO, it says the platform will conclude its fundraising effort on Feb. 25, unless it hits the target before that date.

In all seriousness, please don’t send funds to this platform. Investors who do are unlikely to see their bitcoin again.

“What this Bakkt” and bitcoin address signup screenshots from bakktplatform.io

The Palestinian military-political group Hamas, which the U.S. government deems a terrorist organization, may be using the Coinbase cryptocurrency exchange for fundraising.

Earlier this week, the Israeli blockchain analytics firm Whitestream identified several bitcoin wallet addresses referred to on official Hamas digital media channels in public requests for donations. One such appeal for bitcoin donations to support “the resistance” was issued on January 31, via a Telegram channel run by Abu Obeida, a spokesman for Hamas’ military wing.

As the Israeli newspaper Globes reported, those wallets included a Coinbase account.

Although Coinbase declined to comment on the address in question, Whitestream told CoinDesk that the account continued to receive transactions even 48 hours after it was identified and reported in the media.

“Based on shared inputs, we can tell that Hamas blockchain transactions were signed by addresses that are operating on Coinbase company wallets,” Itsik Levy, the firm’s founder and CEO, told CoinDesk.

Adding this account’s sum to two other bitcoin addresses Whitestream also identified as recipients of the Hamas fundraising campaign, the Islamic organization appears to have garnered less than $4,000 in bitcoin.

“[Hamas] is struggling with getting funds from the Israeli government and Qatar,” Levy continued. “We’ve heard of other Islamic extremist organizations doing the same thing over the past few years…now Hamas tries the same thing.”

“It’s still an active campaign,” he added. “It just started.”

Even if this is a case of terrorist financing solicited by the Hamas military wing, the Izz ad-Din al-Qassam Brigades, Coinbase is hardly the sole company involved with this week’s activity.

Whitestream also reportedly identified this Hamas-operated Coinbase account potentially sending bitcoin to a Binance account and a CoinPayments account, the latter of which is a wallet provider legally incorporated in the Cayman Islands. Binance and CoinPayments did not immediately reply to requests for comment on these transactions.

Fringe activity

Several studies – including a 2018 report by the Foundation for Defense of Democracies’ Center on Sanctions and Illicit Finance – have asserted cryptocurrency usage among jihadists is still an extremely “fringe” activity.

Whitestream co-founder Itsik Levy told Globes “only 2 percent” of the bitcoin transactions his firm analyzed were connected to “terrorist or criminal activity.”

Furthermore, compared to a CoinDesk report from 2018, even the monthly volume of a single bitcoin dealer serving dozens of Gaza-based retail investors would dwarf the sum collected so far in these Hamas-affiliated accounts.

The Hamas spokesperson has not posted in the Telegram group since the last request for bitcoin donations on February 2, CoinDesk found. On that same day, this bitcoin address was tweeted by the Brigades’ global outreach account.

This may be inspired by the way the Islamic State’s Gaza wing, a fierce rival of Hamas, reportedly raised $8,000 worth of bitcoin donations by March 2018. However, there appears to be confusion among these supporters about the transparent nature of blockchain data.

On January 30, Palestinian journalist Hussam Al-Dajany said during an interview on Hamas-owned Al-Aqsa TV that: “People who donate using this currency cannot be identified by any security agency.”

Hamas image via Shutterstock