Vegas Mother-Son Duo Alleged of a $12 Million Crypto Ponzi Scheme

The Securities and Exchange Commission obtained a temporary restraining order on a mother-son duo that embezzled more than $12 million from at least 277 investors. Throughout the years, the 86-year-old woman and her 54-year-old son promised to generate income for their clients via investing in securities and cryptocurrencies but instead swindled the funds for themselves.

The Deceptive ‘Supercomputer’

The Securities and Exchange Commission (SEC) announced that it had stopped the alleged offering fraud by Joy Kovar (86) and her son Brent Kovar (54). The team started its illegal operation in 2018 and has raised about $12 million from 277 investors since then.

The family used their Las Vegas-based company Profit Connect Wealth Services to lure people into a typical Ponzi scheme. They assured investors that they would allocate their money in securities trading and digital assets based on recommendations calculated by an “artificial intelligence supercomputer.” Michele Wein Layne – Director of the SEC’s Los Angeles Regional Office, commented:

“As we allege, the defendants targeted investors who were looking for safe products for their retirements and their children’s educations, offering a money-back guarantee on top of the phenomenal results they promised to achieve using a purported “supercomputer.” Investors should be wary of individuals and firms who guarantee double-digit returns with no risk of loss.”

The alleged firm insisted that the “supercomputer” would guarantee at least 20-30% fixed returns annually with monthly compounding interest. According to the SEC, though, the Kovar family did not use the funds coming from investors to trade securities or buy cryptocurrencies.

Instead, they transferred “millions of dollars to Joy Kovar’s personal bank account,” paid huge amounts of money to promoters, and made Ponzi-like payments to other investors. Additionally, more than 90% of Profit Connet’s funds came from investors.

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Per the accusations, Joy Kovar opened eight accounts at three different banks. In his turn, Brent Kovar once received more than $350,000 from investors, which he used to buy a residential home for himself. A hearing on July 26th, 2021, would determine the legal consequences of the illegal actions of the mother-son duo.

15 Years in Prison for Stealing $16M in BTC

Earlier this month, CryptoPotato reported about the case of Roger Nils-Jonas Karlsson. The Swedish resident pleaded guilty to luring at least 3,575 people into a fraudulent Bitcoin investment scheme. According to the investigation, he embezzled more than $16 million from his illegal actions and will spend the next 15 years in federal prison.

The 47-year-old man skimmed thousands of people in a “Ponzi scheme” between 2012 and 2019. During that period, the criminal convinced more than 3,500 people to send him funds in bitcoin and other digital assets, which he later used for personal enrichment, acquiring a resort in Thailand, luxurious condos, and even a racehorse.

After a successful investigation, the Department of Justice (DOJ) halted his criminal operations. In addition to the 180 months behind bars, he had to forfeit the Thai resort alongside other properties that he bought throughout the years.

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As Ethereum Price Suffers, Investors Wonder If ETH Can Become Deflationary

Ethereum has not been left out of the onslaught currently happening in the market. The coin has lost over 2.4% in the last 24 hours and is now trading in the $1,700 territory as of the time of writing this article. The digital asset continues to dip as the crypto market continues to experience massive losses.

Ethereum has now lost over 50% from its all-time high in April when the coin had shot past $4,000. Holders continue to remain bullish on the coin as upgrades promise new and exciting things in the future of the digital asset. The coin continues to experience growing anticipation in wait for the move to ETH 2.0.

Related Reading | Ethereum 2.0 Contract Reaches 100,000 ETH Milestone

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But now a whole other question has arisen in regards to Ethereum, and that is if the digital asset will ever become deflationary.

Unlimited ETH Supply

Given the structure of Ethereum, it is not a stretch to say that the digital asset does not possess any hard cap. The network is structured that for every new block created, two ETH coins are produced. Then this means that as long as people continue to use the network, then more ETH coins will continue to be created.

An unlimited supply of any currency or asset puts that asset or currency at risk for inflation. Thus, Ethereum’s model remains an inflationary one due to there being no cap on the overall supply of ETH.

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Related Reading | Ethereum Whales Go On Buying Spree, Top 10 Addresses Now Own 20% Of All ETH

This is currently the model that Ethereum runs on. But with the scheduled EIP-1559 network upgrade, this means that the network’s entire monetary policy might be changing.

The upgrade is meant to curb this inflationary problem. With the EIP-1559 comes a fee-burn mechanism. This mechanism will ensure that an estimated 30% of transaction fees generated will go to the miners or validators in ETH 2.0. Then the other 70% of the transaction fees will cease to exist, or in easier terms, the coins will be burned.

This means that instead of two new ETH coins being produced for each new block created and adding to the current Ethereum supply on the market, the base network fees will be going towards removing them entirely.

What This Means For Ethereum

This mechanism will reduce the number of new ETH coins coming into the market and getting sold. It will drastically reduce the supply of new coins, hence trying to make the digital asset deflationary.

This mechanism works and adjusts according to the current network activity at any given time and is dependent on block space. Given this, there is no way to tell how much Ethereum will be burnt over time after this mechanism is implemented.

Related Reading | How Ethereum Can Reach $2 Trillion In Market Cap, Matthew Sigel

In addition to this, the burn rate could end up being much higher than the issuance during times of high congestion. This, in turn, could end up leading to a liquidity crisis in the network as too much ETH gets burnt.

Holders of the digital asset remain unfettered by this though. Ahead of the ETH 2.0 complete upgrade, over 6.3 million ETH coins have been staked in the ETH 2.0 deposit contract. Representing over 5% of the current Ethereum supply locked ahead of the upgrade.

Ethereum price chart from TradingView.com

Ethereum price chart from TradingView.com


Ethereum price continues to trade below $2,000 | Source: ETHUSD on TradingView.com

Forecasts remain that this number will grow even more as the upgrade which is scheduled for 2022 is still a while away and this gives more investors time to get in on staking.

Holders have also staked about 9.34 million ETH in DeFi and are currently earning yield on various DeFi platforms from their staked ETH.

As the upgrade draws nearer, it is only a matter of time before it will be apparent how this will affect the monetary policy of Ethereum.

Featured image from Cryptocoin Spy, chart from TradingView.com

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One Crypto Sector Set To Disrupt Entire Financial System and Global Business Models, Says Macro Guru Raoul Pal

Macro analyst and Real Vision CEO Raoul Pal believes one particular sector of crypto will restructure finance and global business operations.

In a new interview on Real Vision, Pal makes the case for non-fungible tokens (NFTs), claiming that the breakthrough of tokenizing real-world assets will completely reshape the way we conduct business.

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“Basically, I have for a long time been talking about [how] we can tokenize everything conceptually. NFTs were the breakthrough. That was the token that you can tokenize anything on… 

What does this all mean? It basically means the breakthrough has been made to attach intellectual property, or physical assets, or digital assets, to a blockchain in a method that is transferable, instantaneously, to anybody, and storable, and proven in its store.

So, using that, you can limit scarcity and also imply smart contracts. So the multiple uses of this are, almost – we can’t think them through. It’ll change everything from the insurance business to the real estate business. It’ll probably change everything from how we notarize things, to the art world, to the music world, to how businesses are built using community tokens, which are basically a variation of NFTs.”

Pal highlights that the nascent crypto sector is showing massive potential to change the financial markets

“This is going to really break everything. I think the securities market will be attached to tokens, NFTs. I think we will find all financial instruments will go that way, because why? We can settle instantaneously, we can trade 24 hours a day, and it doesn’t cost anything to do it.”

The macro guru adds that while everyone thinks decentralized finance (DeFi) is the big breakthrough, Pal is less excited by DeFi, and believes the NFT space is where the true innovation lies. 

“When I look at NFTs, that’s when I get really excited. And again, I’m not talking about collectibles. I’m not really interested in that market, other people are, and it’s very interesting, but it’s not for me. What I’m interested in is a disruption of global business models, supply chains, and all of the things that can come with NFTs, and a change in the entire financial system that could be attached to this technology.” 

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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Bitcoin For Georgia: How To Use Bitcoin As A Nation!

Georgia is just one of many developing countries which would benefit from the adoption of Bitcoin.

“The effects from major countries’ policies will hit emerging countries economically and financially.” -Jack Mallers (CEO Strike)

“Bitcoin is perfect money for the internet. It is instant, it is safe, it is free. Bitcoin is the internet of money. At its core, Bitcoin is a great technology that will change the world forever.” – Andreas Antonopoulos (Author)

“Cryptocurrency has become a worldwide transaction of which you cannot even identify who owns what. The technology is so strong that I don’t see the kind of regulation that we can do. Bitcoin has made our currency almost useless or valueless.” – Sani Musa (Senator from Nigeria)

“Bitcoin is the first network in the history of the world that is engineered to host a synthetic safe haven long duration asset. It is a thermodynamic sound network for storing, channeling monetary energy over time with no power loss. It is the critical engineered technology of the decade, maybe of the century.” – Michael Saylor (CEO MicroStrategy)

“Central Banks are increasingly taking actions that may cause harm to the economic stability of developing countries and emerging markets. That in order to mitigate the negative impact from central banks, it becomes necessary to authorize the circulation of Bitcoin with the supply that cannot be controlled by any central bank and is only altered in accord with objective and calculable criteria.” – Nayib Bukele (President of El Salvador)


Bitcoin Fixes Important Problems For Developing And Emerging Markets

(Source: Jack Mallers – improved by the author):

  • Bitcoin has a fixed supply that is not dependent on demand; it´s super saleable across time and space.
  • Bitcoin has a monetary policy enforced by a distributed network, so that the network is the most secure in the world.
  • There is a predictable issuance; you can determine exactly how many bitcoin there are and how many bitcoin will be created.
  • Bitcoin is open, global, permissionless; it works the same everywhere and Bitcoin is for everybody.
  • Bitcoin improves remittance for the residents; the final (international) settlement of bitcoin is faster than in fiat.
  • There are lower transaction fees than in the classic financial system; from microtransactions up to millions of dollars — anyone can send anything almost for free.
  • Bitcoin improves financial inclusivity; banking the unbanked.
  • Creates technological progress; any country can immediately get to the same level of technological development and financial infrastructure as more developed countries.

The Lightning Network, which is built on top of the Bitcoin network and is a further development of the payment function, is a great technology because money is nothing more than a technology. You can send money with the Lightning Network from any point in the world to any other point in the world instantaneously, securely and for minimal fees — sometimes less than a cent — or for practically no fees at all.

“Bitcoin itself is a physical asset. So, there’s no sense of credit, there’s no sense of balance sheet flow; you’re not borrowing money from anybody. The actual physical value is travelling in real time. It’s going to take a second for physical value to move and it’s going to cost us nothing. That in itself is a massive step forward for money as a technology. By the way, there’s no counterparty risk and no reversals. It is the only instrument that can achieve global cash finality instantly and at no cost.” – Jack Mallers

Lightning Network has the following features:

  • Instant settlement and no dependence on foreign banks
  • The network is owned by the community. It operates by simple mathematical rules that everyone who uses the network agrees upon.
  • No intermediaries
  • No fees
  • Fast transactions in real time
  • Digital transactions that require only a smartphone with internet access

What does this all mean for a developing country like Georgia? A country with 3.8 million inhabitants who have an average age of 38 years old. The unemployment rate is about13%. 50 to 70% of the workforce is self-employed. The country is bordered by Russia in the North, Turkey and Armenia in the South, and Azerbaijan in the East. Georgia is sparsely populated. More than a quarter of the population lives in the capital region around Tbilisi. Other large cities include Batumi, Kutaisi and Rustavi (20% of Georgia is still occupied by Russia).

  1. Banking the unbanked: According to World Bank, about 40% of all Georgians did not have a bank account as of 2017. In 2019 Georgia had 3.8 million inhabitants. So of those, about 1.4 million are without a bank account. With a smartphone, these people could immediately participate in international and domestic payments using bitcoin. If the country gave away cell phones with a hot wallet to those without a bank account, it would cost just $105 million (in United States dollars), providing the entire population with the safest and hardest means of payment ever invented.
  2. Protection against inflation: In June 2021 Georgia broke a 10-year record high, charting an annual inflation rate of 9.9%. Bitcoin is the hardest asset in the world with a stock-to-flow ratio (the underlying value is, on the one hand, the available quantity of an asset, i.e. all units of a currency, and the quantity of Bitcoin that is added to this stock every year. Finally, the ratio of the two values, stock and flow, describes the total amount of time it would take to reach the total stock at the current rate) of about 57.
  3. Becoming more independent from large nations: For example, the EU is investing a lot of money in Georgia. This week the EU offers €3.9 billion to help Georgia improve connectivity. Georgia is very dependent on foreign investment (the net international investment position (IIP) of Georgia amounted to -$22.8 billion, accounting for -142.1 percent of the last four quarters’ Gross Domestic Product). Investing in Bitcoin and waiting for it to increase in value would provide an alternative to relying on foreign investments.
  4. Improve remittances: Approximately 13% of Georgia’s GDP is made up of foreign remittances. Thus, according to the World Bank, many Georgians received money from abroad or sent money abroad in 2019. If we take 5% transaction fees (which is moderate) on a volume of $2.5 billion in Georgia, then that is $125 million in fees paid by Georgian citizens to foreign financial service providers in order to participate in international payments. This $125 million in fees can be expressed in working time of the population. The average monthly wage is about $450 in U.S. dollars. So, the population of Georgia together has to work 277,777 months to pay the transaction fees for the “modern” payment system. With Lightning, these remittances could be made almost free of charge, and in real time.
  5. Improve Gross Domestic Product: Using Bitcoin for foreign transactions would increase the GDP of Georgia (about $18 billion) by about 0.5%-0.7% for free. In addition, bitcoin-friendly laws would attract investment from abroad. The market capitalization of bitcoin is currently about $700 billion. Assuming that a Bitcoin standard in Georgia leads to investments of about only 0.1% of Bitcoin’s market capitalization (mining companies, exchanges, payment companies, investment funds, infrastructure for Bitcoin, and more), that would be about $700 million in new investments in Georgia. This would also allow the Georgian state to collect more taxes. But just the lower foreign remittance fees plus more investments would increase Georgia’s GDP by about 4.4%.
  6. Reduce merchant fees: Instead of using foreign payment service providers, such as Visa or Mastercard, one could use the comparable service on the Bitcoin network, i.e., the Lightning Network. Approximately 1.5-2.5% is charged for each transaction made by customers in Georgian businesses. Not to be neglected, expensive technology has to be acquired in order to use credit cards. What’s more, bitcoin offers an instant settlement with no chargebacks or anything like that. The startup costs for technology are also eliminated because all that is needed is a smartphone with internet access.
  7. Digital IDs, or a legal proof of identity: Digital IDs should be designed from the beginning to provide better privacy, security, and control. In Georgia, for example, about 6% of the population have no ID — which is also one reason why many people don’t have access to the banking system. Bitcoin fixes this. With Bitcoin it doesn’t matter what country’s passport a person possesses, or even if they have a passport at all – or any other form of ID. It also doesn´t matter what nationality or ethnicity one is. Anybody can connect to this network. Why not just give every citizen a public address in the blockchain using Microsoft’s Project ION, for example? Bitcoin’s decentralized, secure, proven technology is already in existence.
  8. Using mining as a country: Georgia’s domestic energy production is very advanced. Most of the energy needs are met with cheap and sustainable hydro energy. Bitcoin mining is a very effective incentive system. The cheaper the electricity, the more profitable the mining efforts. Since renewable energy is the cheapest of all energy sources, there is an incentive to expand renewable energy. For example, one could connect mining operations to hydroelectric power plants and use the profit to continue investing in the infrastructure. “According to estimates, currently only about 25% of Georgia’s potential is exploited. Therefore, there is a lot of untapped potential, mostly from hydro resources, but also from wind, solar, geothermal and biomass sources as well.” – investingeorgia.org
  9. Get investments from all over the world: “The relative cheapness of labor (compared with the EU), the simplified business registration system and relatively low tax burden (again, compared with the EU) may prove to be stimulating factors in the creation of new jobs in the national economy of Georgia” – Vladimer Papava from the Ivane Javakhishvili Tbilisi State University. 
  10. Georgia is a country with the lowest electricity costs in the world. The price of electricity is 0.058 in U.S. dollars per KWh for households, and 0.053 in U.S. dollars for businesses – which includes all components of the electricity bill such as the cost of power, distribution and taxes. Georgia is ranked 12th in the world in the Index of Economic Freedom. With a progressive Bitcoin policy, these advantages could be used to attract global investment.
  11. Strengthen the local banking system: For being such a small country, there are a lot of banks in Georgia (Silk Road Bank, VTB Bank, terabank, BasisBank, TBC Bank, Bank of Georgia, Halyk Bank, ProCreditBank and CartuBank). Central Bank Digital Currencies (CBDC) are a threat to the traditional banking system. Money is already almost completely digitized. Cash still plays an important role in Georgia,but digital payments are growing rapidly here, too. Bitcoin can be for traditional local banks what CBDCs are supposed to be for central banks. Banks could gain new customers, participate more in international payments and probably generate more revenue if they embrace Bitcoin and the underlying technology. They could develop exchanges, wallets, or financial instruments for Bitcoin.
  12. And many more!

This was just a summary from the 37-page report “Bitcoin for Governments.” I like the country Georgia and the people. The nature here is beautiful, the food delicious, the wine tasty, and the culture fascinating. But you can probably substitute Georgia with any one of many developing countries worldwide, which would all likewise benefit from Bitcoin adoption.

Bitcoin would help so many countries that are forgotten by big nations. Emerging nations like Georgia can become ascendant countries and overtake the West if they move faster on key enabling technologies like Bitcoin. For me, the most exciting aspect of the Bitcoin network is financial inclusion and economic empowerment for developing markets. Bitcoin is not about rich countries getting richer. It’s about closing the gap and turning emerging markets into developed markets.

Thank you!

About the Author:

My name is Max Mittelstaedt and I am a Business Psychologist from Germany. When I was looking for a new challenge, I came across Bitcoin. I was immediately fascinated and fell right into the “rabbit hole.”I am convinced that Bitcoin will bring us a better world and can help individuals, businesses and governments. Thanks to Ralph, Jeremy and the Bitcoiners from Wernigerode for the support.

For updates on Georgia and my attempt to make Bitcoin more popular here, follow me on Twitter.

This is a guest post by Max Mittelstaedt. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

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After 3 Months In The Red, Why Bitcoin Is The Crypto Market’s Best Performer

Bitcoin broke below its support zones and trades around its yearly open after another massive selloff. At the time of writing, the first cryptocurrency by market cap trades at $29,605 with an 11.2% loss in the weekly chart.

Bitcoin BTC BTCUSD

The crypto market has followed Bitcoin, except for a handful of coins, and the top ten sit on more pronounced losses.

For three consecutive months, BTC and major cryptocurrencies have been in the red. May and June saw two capitulation events that pushed BTC’s price below its current levels. Hence why so many investors and traders expect further downside to consolidating a third and possibly final capitulation.

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The weeks leading to the most recent crash saw Ethereum (ETH) outperforming Bitcoin (BTC). The second cryptocurrency by market cap rose from around $1,600 to $2,390 before retracing to current levels.

However, a recent report by Arcane Research concluded that BTC remains the best performer in the crypto market. In consequence, the BTC Dominance has increased as altcoins are pushed further down their support levels.

As seen below, the Bitcoin Dominance stood at 46.92% by the time the report was published with ETH following with a 16.96%. USDT (5.12%), BNB (3.72%), ADA (2.86%) taking on XRP (2.05%) and DOGE (1.82%) positions.

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Bitcoin BTC BTCUSD

The chart shows that Bitcoin retraces around 11.2% since the beginning of July 2021. Cryptocurrencies with large market caps saw the less severe drops with only 18.5% closely followed by small-cap tokens with 19.6%. Mid-cap cryptocurrencies took the biggest fall with a 22.4% drop. Arcane Research said:

(…) All indexes have now seen considerable negative monthly returns three months in a row. In May, all indexes saw negative returns of around 30%. In June, the monthly returns ranged between -5% for bitcoin to        -28% for the Small Cap Index. This month, we’re currently on the path towards another month of substantial negative returns for the broad crypto market.

Bitcoin Derivatives Experience Rise In Open Interest

Arcane Research also registered a decline in volatility for the 7-day chart. This metric stood at 1.68%. The last time Bitcoin experience such low volatility was in October 2020.

Conversely, the BTC-based derivatives have seen an increase in Open Interest (OI). The Bitcoin futures have been playing a major role in the market’s dynamics. The first capitulation event was preceded by a high OI with a spike in liquidations when BTC turn to the downside.

This metric was on a decline but is moving towards April and May highs, Arcane Research said, with 395,000 BTC. This represents a 95,000 BTC increase since OI touched a bottom at the end of May.

Bitcoin BTC BTCUSD

In the coming weeks, the market could see further movement due to the recovery in the Bitcoin hashrate and the implementation of Ethereum’s EIP-1559 with the London Hardfork.

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Study suggests Canadian CBDC could promote digital innovation within the country

A study released by Canada’s central bank, Banque du Canada, has noted a number of favorable reasons that the country could benefit from its own Central Bank Digital Currency, or CBDC.

The document laid out two scenarios that might result in the bank issuing a CBDC at some future date. One would be if citizens were no longer widely using cash within the country for reasons that were left unspecified. The other could be if a digital currency, public or private, were to become so widely adopted as to threaten the sovereignty of Canada’s existing central currency.

Participants did not see either scenario as a likely outcome in the near future, but noted that an interest in stablecoin regulation and adoption had increased within the country in recent months. Even so, the study found that cryptocurrencies and stablecoins used as a means of payment in Canada are currently a “novelty for a small number of enthusiasts.”

Related Bank of Canada sees no strong case for a digital dollar — For now

The document acknowledged a number of potential benefits inherent to the adoption of a CBDC. Namely that the technology could have the same level of safety as cash while allowing for use in payment systems for online transactions and peer-to-peer transfers. When compared to payment options like credit or debit cards, a CBDC would also not necessarily have the same type of transaction fees for retailers:

“A CBDC could be a simpler competition policy tool because it would provide an alternative low-cost payment instrument for customers and merchants. This would help bring down the interchange fees charged by the established networks.”

That a CBDC could potentially support smart contracts was also a point of interest, as they could increase the speed and accuracy of execution by automating actions that are typically done manually. Participants felt that smart contracts would create some risk for users however, given that smart contract developers would likely be independent from the bank’s CBDC platform. This could be problematic if the execution of the contract did not follow the terms agreed upon, whether purposely or otherwise. They advised that smart contracts, as well as the programmability of a Canadian CBDC, would need to be studied further before implementation is decided.

There could be many benefits to creating a CBDC for Canada. The study explained:

“In general, we argue that a CBDC might be beneficial and probably necessary to ensure a competitive and vibrant digital economy.”

Canada is not the only country looking into possibly implementing a CBDC. Last week while speaking to the House of Representatives, Chairman of the Federal Reserve Jerome Powell said there would be no need for stablecoins or cryptocurrency if there was a digital U.S. dollar. A paper focusing on the benefits and risks of a digital dollar is expected to be released sometime in September.