Katherine Ross

Kraken is acquiring Dutch company Coin Meester BV (BCM) as the crypto exchange continues to make a European push.&nbsp;



BCM operates as a crypto broker in the Netherlands and was founded in 2017.&nbsp;



Details about the deal were not made public, and completion of the deal is subject to closing conditions.&nbsp;



In a statement about the acquisition, Kraken CEO David Ripley called the Netherlands a “key market” for Kraken. The crypto broker will give the exchange a “sizable position in the Dutch market.”



“The European market for crypto services is highly fragmented and we see significant opportunity for consolidation to strengthen our position in the region,” Ripley said.&nbsp;



“We&#8217;ll continue to invest in the expansion of our European business and are well positioned to capitalize on the opportunity for further growth in the years ahead. We have a very compelling value proposition and look forward to serving even more clients across Europe.”



Kraken <a href="https://blockworks.co/news/kraken-licenses-spain-ireland">received an EU e-money institution license</a> from the Central Bank of Ireland in late September. It also received Virtual Asset Service Provider (<a href="https://blockworks.co/tag/vasps">VASP</a>) registration from the Bank of Spain.



“We see a firm foundation for crypto in Europe, which has forward-looking regulation that enables us to grow with confidence,” Curtis Ting, Kraken’s vice president of global operations, said at the time.



The European Union’s <a href="https://blockworks.co/tag/mica">Markets in Crypto Assets</a> (MiCa) regulatory framework is set to be fully incorporated next December, giving firms a bit of runway to become compliant under the new rules.



Kraken is also <a href="https://blockworks.co/news/kraken-stock-trading">reportedly interested in expanding its business </a>to stock trading, according to a September report from Bloomberg.&nbsp;



“<a href="https://blockworks.co/tag/kraken">Kraken</a> is always exploring how it can power the global adoption of cryptocurrencies. While we can’t comment on rumors or speculation, we’re looking to broaden and enhance our offering so clients continue to have secure and seamless access to Kraken’s full product suite,” a spokesperson from Kraken told Blockworks at the time.



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Kraken to acquire Dutch crypto broker in European expansion

Shalini Nagarajan

Three major financial institutions are collaborating to develop a prototype monitoring system to actively track the international flows of Bitcoin.



Project Atlas, a collaborative effort involving the Bank of International Settlements and the central banks of Germany and the Netherlands, aims to provide customized data on cross-border flows for central banks and financial regulators.&nbsp;



The &#8220;proof of concept&#8221; platform combines data from crypto exchanges and public blockchains gathered by nodes, according to a <a href="https://www.bis.org/about/bisih/topics/suptech_regtech/atlas.htm">report</a> released Wednesday.



Under the concept, the system tracks crypto asset flows between different locations using Bitcoin network transactions linked to crypto exchanges and their geographical locations as a proxy for cross-border capital movement.&nbsp;



There could be inaccuracies in this data due to the anonymous nature of crypto wallets, which can be created without specifying the user&#8217;s location, the report said.



Initial findings as outlined in the report, indicate that while flows between crypto exchanges constitute a relatively small portion of the overall on-chain network activity, they hold notable economic significance.



“There is a need for central banks and financial regulators to gain firsthand knowledge of crypto asset and DeFi markets, and there is a dearth of reliable and tailored data for such purposes,” the team behind Atlas wrote.



Read more: <a href="https://blockworks.co/news/bis-tokenization-central-banks-cryptocurrencies">Like crypto or not, central banks need to prepare, BIS innovate head says&nbsp;</a>



“Policymakers must understand the underlying data that feed into aggregate indicators to make well informed decisions,” they added.



The cryptocurrency markets encountered one of its worst years in 2022 due to lack of transparency and a liquidity crisis, predominantly triggered by the turmoil involving Sam Bankman-Fried and FTX, resulting in losses for investors.



Don’t miss a moment of SBF’s time in court. Stay up to date with all<a href="https://blockworks.co/tag/sbf-trial"> trial coverage</a> from Blockworks.



The BIS report pointed out other issues such as vulnerabilities exposed in DeFi projects through the <a href="https://blockworks.co/news/curve-suffers-exploit">$70 million Curve Finance exploit</a> and the collapse of Terra Luna&#8217;s algorithmic stablecoin.



To assist policymakers, the front end of Atlas has dashboards that show visual representations of the data aggregation and analysis results.



These dashboards display the total flow in terms of crypto assets converted into US dollars. Additionally, the number of transactions on the network can offer insights into the adoption and significance of crypto markets.



The data platform and dashboards will be shared with other central banks to gather their thoughts on how it can be made better.



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3 central banks unveil prototype for global Bitcoin monitoring

Crypto.com has obtained regulatory approval from the Netherlands&#8217; central bank to operate as a crypto service provider in the country, the exchange said, Friday.



It completed the registration process following an assessment of its operations and adherence to the Netherlands&#8217; Money Laundering and Terrorist Finance Act, it said.



&nbsp;“This registration approval from De Nederlandsche Bank is a significant milestone for our business and the latest testament to our commitment to compliance,” Kris Marszalek,<a href="http://crypto.com"> </a>Crypto.com’s CEO, said in a <a href="https://crypto.com/company-news/crypto-com-secures-registration-approval-in-the-netherlands" target="_blank" rel="noreferrer noopener">statement</a>.



As of now, the Dutch central bank has <a href="https://www.dnb.nl/en/public-register/?p=1&amp;l=20&amp;rc=V1dGVEFD" target="_blank" rel="noreferrer noopener">granted approval</a> to 36 crypto exchanges, which include Coinbase Europe, eToro, OKCoin, BitPay and Bitstamp.



The move is notable as competing crypto exchange Binance has failed to secure the required license in the Netherlands.



Last month, Binance customers based in the Netherlands were notified via email that crypto deposits would be <a href="https://blockworks.co/news/binance-leaves-netherlands-cyprus">disabled</a> from July 17. They were also cautioned against sending cryptocurrencies to previously saved addresses and were informed that NFT trade and NFT staking would be blocked.



Despite making efforts to comply with regulations and serve Dutch clients, the crypto exchange could not obtain registration, a Binance spokesperson told Blockworks.



Binance <a href="https://blockworks.co/news/binance-exits-european-markets">faced similar registration challenges</a> in Germany and Cyprus, leading to its exit from those markets. The exchange says it’s working on achieving compliance with the European Union&#8217;s new digital asset regulation, MiCA (Markets in Crypto-Assets Regulation), in the next 18 months.



Crypto.com didn’t return Blockworks’ request for comment on the measures it took to obtain approval.



Crypto.com has separately obtained regulatory approvals in various countries, including Cyprus, <a href="https://blockworks.co/news/https-blockworks-co-crypto-com_receives_approval">Singapore</a>, France, the UK, <a href="https://blockworks.co/news/crypto-com-secures-provisional-approval-to-open-crypto-exchange-in-dubai">Dubai</a>, <a href="https://blockworks.co/news/crypto-com-buys-south-korean-startups-to-compete-with-local-giants">South Korea</a>, Australia, <a href="https://blockworks.co/news/spain-crypto-com-registered">Spain</a>, Italy, Greece and the Cayman Islands. The exchange <a href="https://blockworks.co/news/crypto-com-suspending-us-institutional-exchange">announced the discontinuation</a> of its institutional exchange service for US customers in June, attributing the decision to decreasing demand.



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Crypto exchange scores Netherlands registration where Binance failed

<div id="highlights-block_62f62940285ac" class="highlights">
 <ul>
 <li>Netherlands&#8217; financial crimes investigator says it has arrested a suspected Tornado Cash developer in Amsterdam</li>
 <li>The US Treasury sanctioned dozens of blockchain addresses with ties to the crypto mixer earlier this week</li>
 </ul>
 
</div>



Dutch financial crimes agency FIOD arrested a 29-year-old developer in Amsterdam on Wednesday over suspected involvement in laundering money through crypto mixer Tornado Cash.



FIOD said a team began probing Tornado Cash in June. The investigation is led by the Public Prosecutor’s office.



“Multiple arrests are not ruled out,” the Fiscal Information and Investigation Service said in a <a href="https://www.fiod.nl/arrest-of-suspected-developer-of-tornado-cash/" target="_blank" rel="noreferrer noopener">statement</a>, adding that the male suspect had been brought before a judge.



Earlier this week, the US Treasury <a href="https://cms.blockworks.co/tornado-cash-sanctions-expose-potential-defi-achilles-heel/" target="_blank" rel="noreferrer noopener">sanctioned</a> Tornado Cash addresses over allegations it laundered $7 billion worth of digital assets since it launched in 2019. That figure matches the total value of funds sent through Tornado Cash since its launch in February last year, per a Dune Analytics <a href="https://dune.com/poma/tornado-cash_1" target="_blank" rel="noreferrer noopener">dashboard</a>.



The platform&#8217;s web interface quickly went dark after major Ethereum node provider Infura pulled the plug, with its website is now offline. Code repository GitHub also shut down Tornado Cash&#8217;s account. Tornado Cash&#8217;s native token, TORN, has collapsed 40% since the sanctions were revealed, per <a href="https://www.coingecko.com/en/coins/tornado-cash" target="_blank" rel="noreferrer noopener">CoinGecko</a>.



“The online service [Tornado Cash] makes it possible to conceal the origin or destination of cryptocurrencies,” FIOD said. &#8220;The (criminal) origin of the cryptocurrencies is often not or hardly checked by such mixing services. Users of a mixing service mostly do this to increase their anonymity.”



<h3 class="wp-block-heading">Circle enforces Tornado Cash sanctions, leaving DeFi exposed</h3>



Tornado Cash&#8217;s protocol and its user interface are open source, meaning that anyone can contribute to its code. The Ethereum-powered project pitches itself as privacy-preserving, allowing users to commingle cryptocurrency inside smart contracts. 



Once digital assets are withdrawn from Tornado Cash — depending on how long they spent in the mixing pool — their financial provenance should be too murky for onlookers to track, the idea goes. 



Benign use cases for Tornado Cash exist. Following the US sanctions, Ethereum co-founder Vitalik Buterin, who was born in Russia, <a href="https://twitter.com/VitalikButerin/status/1556978967554433024" target="_blank" rel="noreferrer noopener">tweeted</a> he&#8217;d used the to donate privately to pro-Ukraine outfits. 



US authorities, alongside blockchain analytics units such as Chainalysis, believe the protocol a favorite among North Korean hacker unit Lazarus Group, which has allegedly used it to wash troves of crypto stolen in various hacking incidents, such as the Axie Infinite and Harmony <a href="https://cms.blockworks.co/the-nine-largest-crypto-hacks-in-2022/" target="_blank" rel="noreferrer noopener">attacks</a>.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Here&#39;s the list of Tornado Cash resources that were banned &#8211; Tornado Cash <a href="https://twitter.com/github?ref_src=twsrc%5Etfw">@GitHub</a> organization &#8211; personal <a href="https://twitter.com/github?ref_src=twsrc%5Etfw">@GitHub</a> accounts of TC contributors &#8211; all <a href="https://twitter.com/search?q=%24USDC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$USDC</a> on Tornado Cash contracts <a href="https://twitter.com/circlepay?ref_src=twsrc%5Etfw">@circlepay</a> &#8211; <a href="https://twitter.com/infura_io?ref_src=twsrc%5Etfw">@infura_io</a> RPC &#8211; <a href="https://twitter.com/AlchemyPlatform?ref_src=twsrc%5Etfw">@AlchemyPlatform</a> RPC &#8211; <a href="https://t.co/SHvgEjTOMV">https://t.co/SHvgEjTOMV</a> domain <a href="https://twitter.com/eth_limo?ref_src=twsrc%5Etfw">@eth_limo</a>&mdash; 🌪️ Tornado.cash 🌪️ (@TornadoCash) <a href="https://twitter.com/TornadoCash/status/1557048526986780677?ref_src=twsrc%5Etfw">August 9, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But enforcing the US&#8217; Tornado Cash sanctions may prove challenging. In an apparent act of defiance, one anonymous user recently <a href="https://twitter.com/josephdelong/status/1557011056572129280" target="_blank" rel="noreferrer noopener">sent</a> small amounts of ether via the protocol to celebrities with known blockchain addresses, including Shaquille O&#8217;Neal and Jimmy Fallon.



Banning the wallets and open source repositories might send a signal, but doesn&#8217;t eliminate the capability, according to Travis Hoyt, NetSPI’s chief technology officer. He believes more bullet-proof solutions could emerge.



“The sanctions also highlight that the extent to which this can be enforced is limited by the reach of US law, and with the global and decentralized nature of the cryptocurrency space, there may still be plenty of additional avenues for criminals to pursue their goals that are out of reach,” Hoyt said.



DeFi apps, in step with Web2 companies such as GitHub, have been reviewing their exposure to Tornado Cash sanctions, particularly in relation to centralized stablecoins such as Circle&#8217;s USD coin (USDC). 



Most of the freshly-banned addresses were USDC contracts linked to Tornado Cash. Circle obeyed the sanctions almost immediately by blacklisting more than 35 Ethereum addresses, freezing $70,000 in USDC.



The Treasury’s move has also opened the door for further protocols getting sanctioned, <a href="https://cms.blockworks.co/makerdao-plans-to-yolo-usdc-into-eth/">according</a> to MakerDAO co-founder Rune Christensen, who alongside several MakerDAO delegates, <a href="https://cms.blockworks.co/makerdao-plans-to-yolo-usdc-into-eth/" target="_blank" rel="noreferrer noopener">floated diversifying </a>treasury funds backing its stablecoin DAI away from USDC altogether.



Crypto researcher and MakerDAO figure Mika Honkasalo <a href="https://cms.blockworks.co/tornado-cash-sanctions-expose-potential-defi-achilles-heel/" target="_blank" rel="noreferrer noopener">told Blockworks earlier this week</a> that the concern extends beyond MakerDAO. Any DeFi protocol with exposure to USDC, such as automated money market Aave, is technically vulnerable to the same treatment.



David Canellis contributed reporting.



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