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Bitcoin exchange reserves hit 3-year low amid BTC scarcity

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Bitcoin exchange reserves hit 3-year low amid BTC scarcity

The Bitcoin exchange reserve, which measures the total amount of Bitcoin available on exchanges, has reached a 3-year low as of June 19, 2024, according to data from CryptoQuant. Currently, there are 2,825,703 Bitcoin left on exchanges, down from approximately 3,039,000 in January 2024.

The approval of Bitcoin ETFs in the United States in January 2024 has significantly contributed to this trend. Inflows into digital asset funds reached $2 billion in May 2024, driven primarily by Bitcoin investment products. Despite this, the Coinshares Weekly Fund Flows report noted $621 million in outflows for the week of June 15, 2024, the largest since March 22, 2024, likely due to hawkish comments from the Federal Reserve. Industry experts believe that institutional adoption is still in its early stages, suggesting that more capital could flow into Bitcoin, further pressuring the already low exchange supply.

Kraken faces extortion over bug bounty report

Cryptocurrency exchange Kraken has revealed that a self-proclaimed “security researcher” exploited a critical security bug to withdraw over $3 million worth of digital assets.

The researcher, who alerted Kraken to the bug on June 9, has refused to return the funds unless Kraken provides a speculative reward amount, according to Nicholas Percoco, Kraken’s Chief Security Officer. Percoco described the situation as extortion rather than ethical hacking. The stolen cryptocurrency came directly from Kraken’s treasury, and the exchange assures that no user funds were endangered. Kraken continues to run its bug bounty programs to ensure platform security and is collaborating with law enforcement to recover the stolen assets.

One of the accounts involved in the exploit had previously completed KYC verification, but the individual’s identity remains undisclosed. Initially, the researcher demonstrated the bug with a $4 crypto transfer, which would have been sufficient to claim a reward from Kraken’s bounty program. However, the researcher shared the bug with two other accounts, leading to the fraudulent withdrawal of nearly $3 million. Kraken maintains that these actions are not in line with ethical hacking practices and is working with law enforcement to retrieve the stolen funds.

German Government Bitcoin movements raise questions

A crypto wallet labeled “German Government (BKA)” by on-chain analytics firm Arkham has sparked curiosity after it started moving Bitcoin on June 19. The wallet, which has held nearly 50,000 BTC since February 2024, moved 6,500 BTC worth over $425 million, leading many to speculate that the German government might be selling its Bitcoin holdings. The funds are believed to have been seized from the pirated movie website operator Movie2k.

The wallet made four transactions on June 19, including one outflow of 6,500 BTC to a new wallet address and another of 2,500 BTC to its own address. The new wallet then moved 2,500 BTC in four 500 BTC transactions, with two going to crypto exchanges Kraken and Bitstamp and the other two to private addresses. Currently, the German government-labeled wallet holds 43,359 BTC worth $2.83 billion. While not all transferred funds were liquidated, the movements have led to speculation about the potential market impact of selling such a large amount of Bitcoin.

Binance fined $2.25m by India’s Financial Intelligence Unit

India’s Financial Intelligence Unit has fined crypto exchange Binance 188.2 million rupees ($2.25 million) for violating the nation’s AML rules. Announced on June 19, the penalty addresses multiple breaches of the Prevention of Money Laundering Act, 2002. Binance, as a Virtual Digital Asset Service Provider, is required to maintain and report transaction records and implement robust AML measures. However, FIU’s investigation found that Binance failed to comply with these obligations, leading to show-cause notices and a ban from operating in India in January 2024. Despite receiving conditional approval from the FIU in May, Binance was required to pay a penalty after a hearing.

The FIU’s findings were based on the director’s written and oral submissions, confirming that Binance did not maintain and report transaction records, furnish required information to authorities, or preserve records as mandated. This fine adds to Binance’s regulatory challenges, including a $4.4 million penalty from Canada’s Financial Transactions and Reports Analysis Centre in May for similar AML violations. Additionally, in February, Nigerian authorities detained two Binance executives over allegations of tax evasion and money laundering.

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June 20, 2024

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