This week saw the end to one of the most egregious ICOs, Veritaseum, as the SEC sought to freeze the remaining assets, since the creator continued to siphon money from the allegedly fraudulent ICO to his own accounts. We also saw just how hard crypto companies have it with banks when Barclays dropped even the relatively buttoned-up Coinbase. Plus, the IRS continues its crackdown, and the community debates whether or not it matters that there’s a huge wealth disparity in Bitcoin.

On the podcast, I finally finagled a months-in-the-making podcast with two IMF staff members. This episode took so long from initial invitation to publication that one of the original guests had left the IMF by the time recording day came around! And on Unconfirmed, we have the author of Electric Capital’s deep dive into the developer activity in crypto, which unearths a number of useful insights.

This Week’s Crypto News…

Barclays Drops Coinbase

Crypto banking woes continue. Although it’s not clear why Barclays got cold feet, on Coinbase’s side, having a prestigious bank came with downsides, such as holding it back from listing some coins. Not that its new UK partner, ClearBank, which is friendlier to crypto companies, doesn’t have concerns; Coinbase delisted Zcash in the UK, a move that was “completely to do with the new bank.”

On a separate note, Coinbase just bought Xapo’s custody business, part of an expansion of its custody business. Xapo will focus on its retail exchange business. CEO Wences Casares told Unchained in 2018 that retail customers made up the vast majority of its business.

SEC Requests Freezing of $8 Million in Assets From ‘Fraudulent’ Veritaseum ICO

It’s definitely worth reading this one about the nonsensical Veritaseum, which raised $15 million in an ICO — the jaw-dropping details start on page 8. Even more unbelievable is what sparked this move by the SEC. As the lawsuit tells it, “On July 30, 2019, the day Commission staff informed Defendants’ counsel that the staff was likely to recommend that the Commission approve the filing of an enforcement action against Defendants, and on July 31, 2019, Defendants moved more than $2 million in remaining Offering proceeds from a blockchain address they controlled into other addresses, and used a portion of those funds to purchase more precious metals. Commission staff requested, through counsel, that Defendants voluntarily agree not to engage in further dissipation of the Offering proceeds, including through the purchase of precious metals. Defendants, through counsel, declined the staff’s request.”

China’s Own Cryptocurrency Is on the Way

Thank Libra? China’s central bank cryptocurrency is being expedited. The digital currency will replace cash in circulation and complement the yuan, giving China even more surveillance over its economy. This week’s episode of Unchained on central bank digital currencies was just in time.

SEC Postpones Cryptocurrency ETF Decisions Again

The SEC is pushing back ruling on the Bitwise Bitcoin ETF and the Vaneck SolidX Bitcoin Trust until October. But Chairman Jay Clayton’s concerns about lack of investor protection from theft and manipulation are unlikely to be allayed by then.

Bitcoin’s Wealth Disparity: Does It Matter?

There was a lot of chatter and a debate this week over the Bitcoin wealth disparity. One stat says 95% of the total supply of Bitcoin is owned by the top 2.8% of wallet addresses, though that is misleading because seven of the ten top addresses are exchanges, among other reasons. Nevertheless, more accurate and nuanced calculations show a large inequality.

Chinese Ponzi Scheme Dumps Bitcoin

Primitive Ventures’ Dovey Wan believes a $3 billion Chinese ponzi scheme, PlusToken, has been shedding its Bitcoin. She identified two of its addresses, which she says contained 169,000 BTC; she says the selloff started in early July. Peckshield Research also appears to be following the money.

The IRS Sends Yet More Warning Letters Regarding Crypto Trades

The IRS is now writing people saying they misreported their trades, however, it could be the reverse — that the IRS believes people have made more on their trades than they did, due to exchanges using forms intended for merchants. At least one user confirmed the IRS overestimated his crypto trading profits. We explained the first round of letters on Unconfirmed last week, but if you received this new one, find out what to do here.

Maicoin Podcast Interview With Vitalik Buterin

In Taiwan, Vitalik discusses everything from Ethereum 2.0 to how best to get a wide distribution of tokens (spoiler alert: he sees downsides in both token sales as well as mining).