Apple sued for blocking crypto tech for P2P payments

November 21, 2023 Coin Telegraph

Apple

Apple faces a class action over alleged anti-competitive conduct in the iOS peer-to-peer payments market.

Disgruntled consumers have filed a class-action lawsuit against Apple claiming the tech giant has conspired to limit peer-to-peer payment options on its devices and block crypto technology from iOS payments apps.

The Nov. 17 complaint filed in a California District Court alleges Apple entered into anti-competitive agreements with PayPal’s Venmo and Block’s Cash App to restrict the use of decentralized cryptocurrency technology in payment apps, which caused users to pay "rapidly inflating prices."

“These agreements limit feature competition—and the price competition that would flow from it—marketwide, including by barring the incorporation of decentralized cryptocurrency technology within existing or new iOS Peer-to-Peer Payment apps,” the filing says.

The plaintiffs also claimed Apple uses “technological and contractual restraints,” including hardware-enforced App Store exclusivity and “contractual limitations on web browser technology” to “exercise unfettered control over every app installed and run on iPhones and iPads.”

With these restraints, Apple can — and does — force new to market iOS P2P payment apps to bar crypto "as a condition for entry," the suit claimed.

*Excerpt of the suit alleging Apple restricts decentralized payment technology. Source: PACER*

The plaintiffs describe themselves as customers who have paid inflated fees due to Apple’s restraints of trade across the iOS P2P payment market.

They seek to recover for excessive fees and overcharging due to Apple’s alleged anticompetitive conduct and injunctive relief barring the firm from continuing to enter into and enforce anticompetitive agreements restraining iOS P2P Payment Market competitors and would-be entrants.

The 58-page class action details the history and rise of peer-to-peer payment apps and decentralized cryptocurrencies and Apple’s entry into this market.

In April, the Court of Appeals for the Ninth Circuit ruled Apple violated California’s competition laws by not allowing apps to direct users to non-Apple linked payment solutions.

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3 reasons why Ethereum price is underperforming altcoins

November 6, 2023 Coin Telegraph

Chainlink

Eth price trades at a key resistance level, but data highlights why the altcoin could struggle to hold $1,900.

Ether (ETH) price surged by 6.2% from Nov. 3 to Nov. 5, but the altcoin faces difficulty in breaking the $1,900 resistance. Despite the current bullish trend, Ether's 17% return over the last 30 days falls short of Bitcoin's (BTC) impressive 27% gain during the same period.

Regulatory hurdles and ecosystem centralization critiques linger

Analysts attribute some of Ether’s underperformance to uncertainty surrounding Consensys, a key player in the Ethereum ecosystem. Former employees have filed a lawsuit against the company and its co-founder, Joseph Lubin. Over two dozen shareholders of the Swiss-based holding company, Consensys AG, claim that Lubin, who is also a co-founder of Ethereum, violated a "no-dilution promise" made in 2015.

Consensys is responsible for developing and hosting infrastructure projects crucial to the Ethereum network. It was founded in October 2014, about nine months before the Ethereum blockchain launched in mid-2015. Furthermore, the High Court of Zug in Switzerland ruled in favor of the plaintiffs, exacerbating the current uncertainty.

Regulatory challenges have hampered the growth of the Ethereum ecosystem. The latest concern centers around PayPal's U.S. dollar-pegged stablecoin, PYUSD, which operates on the Ethereum network. This token is designed for digital payments and Web3 applications. On November 2, PayPal disclosed a subpoena it received from the U.S. Securities and Exchange Commission (SEC).

In addition to regulatory pressures, there has been notable criticism of the decentralization of financial applications (DeFi) within the Ethereum network. Chainlink, a preferred solution for oracle services, quietly reduced the number of participants in its multi-signature wallet from 4-out-of-9 to 4-out-of-8. Analysts have highlighted the lack of governance by regular users as a significant issue.

Ether’s underperformance to altcoins is an evidence of other issues

Several major altcoins, including Solana (SOL), XRP and Cardano (ADA) have outperformed Ether with returns of 75.5%, 37%, and 35% in the last 30 days, respectively. This discrepancy suggests that the factors holding back ETH are not solely related to regulatory pressure or reduced demand for DeFi and NFT markets.

One pressing issue for the Ethereum network is the high gas fees associated with transactions, including those executed by smart contracts. The latest 7-day average transaction fee was $4.90, negatively impacting the usage of decentralized applications (DApps).

Moreover, the total deposits on the Ethereum network, measured in Ether, have dropped to their lowest levels since August 2020. It's essential to note that this analysis does not consider the effects of native Ethereum staking.

*Ethereum network applications' total deposits in ETH. Source: DefiLlama*

According to DefiLlama data, Ethereum DApps had a total value locked (TVL) of 12.7 million ETH on November 5, down 4% from the 13.2 million ETH two months earlier. In comparison, TVL on the Tron network increased by 13% during the same period, while Arbitrum deposits remained at 1 million ETH. Data on DApps activity on the Ethereum network supports the notion of reduced activity.

*Ethereum network top DApps, 30-day active addresses. Source: DappRadar*

Even excluding the significant 60% decline in the Uniswap NFT Aggregator, the average number of active addresses across the top Ethereum network DApps decreased by 3% compared to the previous month. In contrast, Solana's top applications saw an average 18% increase in active users during the same period, according to DappRadar data.

Finally, on-chain activity indicates increased user deposits of ETH at exchanges. While this data doesn't necessarily signal short-term selling, the mere availability of coins is typically viewed as a precautionary measure by analysts.

*Average 7-day daily ETH deposits at exchanges, ETH thousands. Source: CoinMetrics*

The present daily ETH deposit average of 255,614 represents a 30% increase from two weeks earlier, indicating that holders are more inclined to sell as Ether's price approaches $1,900.

The data suggests that reduced TVL, declining DApps activity and a higher rate of ETH exchange deposits are negatively impacting the likelihood of Ether breaking the $1,900 resistance. The price level could be more challenging than initially expected and for now, Ether bears can take a breath.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

PayPal Receives Greenlight To Conduct ‘Certain Crypto Asset Activities’ in the United Kingdom

November 3, 2023 The Daily Hodl

PayPal Says It Has Received a Subpoena From the SEC Over the PYUSD Stablecoin

November 2, 2023 The Daily Hodl

GAO finds controversial SEC guidance is subject to congressional oversight

October 31, 2023 Coin Telegraph

Asset Management

The SEC’s Staff Accounting Bulletin 121 has been the target of much criticism in the crypto community.

United States Senator Cynthia Lummis has scored another one for crypto with a Government Accountability Office (GAO) decision issued on Oct. 31. The GAO found that Securities and Exchange Commission (SEC) Staff Accounting Bulletin 121 should be subject to congressional review. That bulletin, issued in March 2022, has been a source of ire for many pro-crypto lawmakers.

The GAO was acting on a letter sent by Lummis to the U.S. Comptroller General in August 2022. It considered whether the bulletin was a rule subject to the Congressional Review Act (CRA). Under the CRA, a report on an agency rule must be submitted to the comptroller general and both chambers of Congress, with a procedure for Congress to disapprove the rule. Using the definition of a rule found in the Administrative Procedures Act (APA), the GAO found the SEC bulletin to be subject to the CRA. The GAO said:

“It is reasonable to believe that companies may change their behavior to comply with the staff interpretations found in the Bulletin […] The Bulletin is also of future effect and was designed to interpret and prescribe policy. Accordingly, we conclude that the Bulletin meets the definition of rule under APA.”

The bulletin “expresses the views of the staff regarding the accounting for obligations to safeguard crypto-assets an entity holds for platform users,” according to the SEC. It said, “The statements in staff accounting bulletins are not rules or interpretations of the Commission, nor are they published as bearing the Commission’s official approval. They represent staff interpretations and practices.”

This is huge.

The GAO reviewed SAB 121, an illogical anti-crypto accounting bulletin issued by the SEC last March, and found that it's a "rule" under the CRA and APA.

The SEC didn't comply with either.

This is a clear statement from a federal agency that the SEC broke the law. https://t.co/brglK3sm8S
— Jake Chervinsky (@jchervinsky) October 31, 2023

The bulletin used hypothetical situations to describe what the SEC considered best practices to safeguard crypto-assets held by platforms for their users. Coinbase and PayPal are examples of such platforms. It advises platforms to list their users’ assets on their books as liabilities and assets at their fair value at initial recognition. This represented a sharp turn in accounting practice as custodied assets were not previously recorded on balance sheets.

The bulletin was quickly met with objections from several sides. SEC commissioner Hester Peirce released a critical response within days. Peirce stated that the accounting procedure described in the bulletin was a response to risk that the SEC itself was partially the source of.

Five Republican senators, including Lummis, wrote to SEC chairman Gary Gensler in June 2022 to express their disapproval of the bulletin’s “backdoor regulation.” Gensler was further lectured on the bulletin by Representative Mike Flood when he appeared before the House Financial Services Committee this September.

GAO findings are recommendations only. However, the agency notes, “Clearly, agencies are taking our recommendations.”

Magazine: Gary Gensler’s job at risk, BlackRock’s first spot Bitcoin ETF and other news: Hodler’s Digest, June 11-17

Bitcoin Is the Only ‘Neutral Internet Money’ There Will Ever Be, Says Ex-PayPal President David Marcus – Here’s Why

October 13, 2023 The Daily Hodl

Crypto.com to become preferred exchange for PayPal USD

September 28, 2023 Coin Telegraph

Coin Telegraph

PayPal launched its U.S. dollar-backed, Ethereum-built stablecoin in August 2023.

Singapore-based exchange Crypto.com has teamed up with PayPal and Paxos to become a preferred platform for PayPal USD (PYUSD).

According to a press release from Sept. 28, Crypto.com currently possesses the deepest liquidity for PYUSD trading pairs globally. The exchange has listed PYUSD for retail and institutional users, with “trading features coming soon.” This move builds on PayPal and Crypto.com’s previous partnership, such as an option to use PayPal to top up the Crypto.com Visa Card, according to the press release.

In his commentary, Joe Anzures, the Senior Vice President of Americas and Global Head of Payment Partnerships at Crypto.com, called Paxos “a market-leading issuer of stablecoins” and expressed the company’s excitement about the collaboration:

“Connecting our more than 80 million users to the latest crypto innovations, as well as supporting PayPal’s global network of consumers and merchants, will be pivotal in our continued pursuit of crypto to every wallet.”

PayPal launched its stablecoin in August 2023. The U.S. dollar-pegged stablecoin is built on Ethereum and fully backed by U.S. dollar deposits, short-term Treasurys and similar cash equivalents.

PYUSD is present on major exchanges including Bitstamp, Coinbase and Kraken, and is supported as a payment option by BitPay and Metamask. In September, the stablecoin became available to Venmo users. The New York State Department of Financial Services has also included PYUSD on its green list of coins approved by the regulator.

Magazine: Blockchain detectives: Mt. Gox collapse saw birth of Chainalysis

PayPal rolls out PYUSD stablecoin to Venmo users

September 20, 2023 Coin Telegraph

Business

The payments platform said PayPal USD will be “rolling out fully in the coming weeks” after announcing its launch on Venmo.

Major United States-based payment processor PayPal has announced its PYUSD stablecoin is now available on Venmo.

In a Sept. 20 blog post, the payments firm said PayPal USD (PYUSD) — the company’s stablecoin pegged to the U.S. dollar — is already available to Venmo users and will be “rolling out fully in the coming weeks”. The news came roughly six weeks after PayPal announced the launch of the stablecoin, saying at the time it would be issued by Paxos Trust and fully backed by U.S. dollar deposits, short-term Treasuries and similar cash equivalents.

“PYUSD is already present in native crypto experiences, and continues to be made more broadly available as the ecosystem grows,” said PayPal. “In the few weeks since its launch in the open market, PYUSD is already present on select exchanges including Crypto.com, Bitstamp, Coinbase, and Kraken."

PayPal USD issued by Paxos is now available on @Venmo to select users and will be rolling out fully in the coming weeks!@PayPal USD is unlocking the future of money movement. Learn more here: https://t.co/qgDagf5kB5 pic.twitter.com/9yEszDNJQG
— Paxos (@Paxos) September 20, 2023

Blockchain analytics firm Nansen reported in August that roughly 90% of PYUSD was held in wallets controlled by Paxos Trust. Crypto firm BitPay announced on Sept. 12 that it would be adding support for PYUSD, citing “payment utility and community involvement.”

PayPal has been making steady inroads into the crypto space, accepting digital assets payments in 2021 and establishing on- and off-ramps for Web3 payments in 2023. The New York State Department of Financial Services included PYUSD on its greenlist of coins approved by the regulator.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Crypto Biz: PayPal rolls out crypto ramps, Franklin Templeton joins BTC ETF race, and more

September 15, 2023 Coin Telegraph

Coin Telegraph

This week’s Crypto Biz looks at PayPal’s crypto gateway, Franklin Templeton’s BTC ETF filing, Coinbase’s Lightning Network integration, and Meta’s plans for a new AI model.

Without aggressive marketing tactics, fintech giant PayPal is quietly and consistently venturing deeper into the crypto space, rolling out features and building key partnerships to advance its digital assets strategy.

This week, PayPal unveiled new on-ramps and off-ramps for cryptocurrencies for its clients in the United States — a noteworthy step for the country, particularly as many crypto firms struggle with supporting fiat-crypto conversions since the United States Securities and Exchange Commission began its controversial crackdown on the industry.

Also deepening ties with the crypto ecosystem is the traditional asset manager firm Franklin Templeton. The company filed for a spot Bitcoin (BTC) exchange-traded fund (ETF) in the U.S., joining a long list of major investment firms seeking approval for a Bitcoin investment product, including names such as BlackRock, Fidelity and WisdomTree, among many others.

With new participants joining the digital assets world daily, it’s evident that crypto is becoming more mainstream, even in the face of a long bearish market.

This week’s Crypto Biz looks at PayPal’s crypto gateway, Franklin Templeton’s BTC ETF filing, Coinbase’s Lightning Network integration, and Meta’s plans for a new AI model.

PayPal enables US users to sell cryptocurrency via MetaMask wallet

PayPal continues expanding its digital asset services, integrating new methods to sell cryptocurrencies like Bitcoin. The payments giant introduced on Sept. 11 new on- and off-ramps for Web3 payments, allowing users in the U.S. to convert their crypto to U.S. dollars directly from their wallets into their PayPal balance. The off-ramp feature is available to wallets, decentralized applications and nonfungible token marketplaces and is live on MetaMask. The latest rollout came shortly after PayPal partnered with hardware wallet firm Ledger to provide a new on-ramp integration in August 2023, allowing verified users in the U.S. to buy Bitcoin, Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC) directly on a Ledger hardware wallet.

*Promotional video for PayPal's on- and off-ramps. Source: YouTube*

Franklin Templeton files for spot Bitcoin ETF

Asset manager Franklin Templeton applied with the U.S. SEC on Sept. 12 to launch a spot Bitcoin ETF. The S-1 registration statement comes after the SEC delayed decisions on spot ETF applications from WisdomTree, Valkyrie, Fidelity, VanEck, Bitwise and Invesco on Aug. 31 and a court ruling on Aug. 29 that the SEC must consider Grayscale’s application to convert its BTC futures ETF into a spot ETF. According to the application, the fund would be structured as a trust. Coinbase would custody the BTC, and Bank of New York Mellon would be the cash custodian and administrator. Franklin Templeton has $1.5 trillion in assets under management.

Meta is building an AI model to rival OpenAI’s most powerful system

Social media giant Meta is developing a new artificial intelligence (AI) model that will rival OpenAI’s most advanced version. According to sources from The Wall Street Journal, the new model will be “several times” more powerful than its Llama 2 model, which Meta released earlier this year. Llama was trained on 70 billion parameters, and while OpenAI hasn’t released its parameters for GPT-4, they’re estimated to be around 1.5 trillion. Meta’s new system will be open-source, allowing other companies to build AI tools to produce high-level text, analysis and other types of output with it. The company has also been building the data centers necessary to create such a high-level system while acquiring more of Nvidia’s H100 semiconductor chips.

Coinbase to integrate Bitcoin Lightning Network: CEO Brian Armstrong

Crypto exchange Coinbase has confirmed its decision to integrate layer-2 payment protocol Lightning Network (LN) as users seek faster and cheaper Bitcoin transactions. Until recently, major crypto exchanges, including Coinbase and Binance, had no intent to adopt the layer-2 solution, as many community members argued that LN integration offered fewer incentives for exchanges’ income. Brian Armstrong, CEO of Coinbase, asked the crypto community to be patient during the integration process. LN was created to help solve Bitcoin’s scalability problem and to compete against projects promising faster and cheaper transactions. The decision comes a month after Viktor Bunin, a protocol specialist at Coinbase, started investigating the feasibility of LN integration.

We’re looking into how to best add Lightning. It’s non-trivial, but I think worth doing. I’m all for payments taking off in Bitcoin.

Not sure why you think we’re ignoring Bitcoin - we’ve onboarded more people to Bitcoin than probably any company in the world.

Let’s build it… https://t.co/9dFGYd6XZt
— Brian Armstrong ️ (@brian_armstrong) August 2, 2023

Crypto Biz is your weekly pulse on the business behind blockchain and crypto, delivered directly to your inbox every Thursday.

Paxos confirms it’s responsible for $500K mistaken Bitcoin transaction

September 13, 2023 Coin Telegraph

Bitcoin

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

The account that overpaid $500,000 in fees on Sept. 10 for a Bitcoin transfer belonged to Paxos, according to a Sept. 13 statement from the company. Paxos claimed that end users have not been affected and all user funds are safe. Paxos is most well-known as the issuer of stablecoins, including PayPal USD (PYUSD) and Pax Dollar (USDP), but also runs a crypto brokerage firm that carries Bitcoin (BTC).

The statement comes after users on X (formerly Twitter) were speculating that PayPal may have been responsible for the transaction due to a related wallet account that had been identified by analytics platform OXT as belonging to PayPal. A Paxos representative told Cointelegraph that PayPal was not responsible, as the error was its own, stating:

“Paxos overpaid the BTC network fee on Sept. 10, 2023. This only impacted Paxos corporate operations. Paxos clients and end users have not been affected and all customer funds are safe. This was due to a bug on a single transfer and it has been fixed. Paxos is in contact with the miner to recoup the funds.”

The mistaken transaction was first discovered on Sept. 10, shortly after it had occurred. According to blockchain data, the sender paid fees of approximately 20 BTC (over $515,000 worth 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 declared that the sending account “looks like an exchange or payment processor with buggy software,” as it had made over 60,000 transactions from the same address.

The block that contained the transaction was confirmed by Bitcoin mining pool F2Pool. On Sept. 10, the pool’s management offered to return the funds to whoever sent the transaction if a claim was made within three days. Otherwise, the exorbitant fee would be paid out to the pool’s hashing power contributors.

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

BREAKING
The fat fingers belong to PayPal https://t.co/pKN0w5SfKB
— mononaut (@mononautical) September 13, 2023

According to Mononaut, the sending account, bc1qr35hws365juz5rtlsjtvmulu97957kqvr3zpw3, had exhibited behavior that “closely matches the behavior of a now inactive wallet [bc1qhs3gptkxem5y7yaq2yg0un2m8hae6wt87gkx4n].” This inactive address was labeled “Paypal” by blockchain analytics platform OXT.

To add further evidence for their hypothesis, Mononaut pointed out that this old wallet address transferred its funds to the new address through an intermediate account. Bitcoin blockchain data shows that the old address labeled “Paypal” by OXT transferred approximately 18.5 BTC to address bc1qlm0xlahpysq2v9yh5rhcc430xjz3xknqqnyvaf on June 19. That account then sent ‎around 5.37 BTC to the new address that later made the mistaken transaction. Lopp shared the thread, wondering aloud if PayPal would request the funds back.

Paxos later issued its statement confirming that the mistake had been its own, not PayPal’s.

Paxos isn’t the first crypto user or company to potentially pay thousands of dollars in fees because of a mistake. In 2019, one Ethereum user lost over $300,000 when they mistakenly pasted values into the wrong fields. Luckily for them, the mining pool agreed to return 50% of the funds lost. In 2020, another Ethereum user mistakenly paid $9,500 for a $120 trade. The user claimed that the mistake had “destroyed [their] life.”

In its statement, Paxos claimed that it had contacted the mining company that confirmed the transaction and is attempting to recover the lost funds.

PayPal