Decentralization is kind of a big deal when it comes to cryptocurrencies. The whole idea behind the creation of cryptocurrencies by Satoshi Nakamoto was to give ownership to the masses and do away with the control that financial institutions and governments have over fiat currencies and other assets. It is this decentralization that has attracted so many investors into cryptocurrencies and continues to appeal to so many more.
Ethereum is a blockchain platform based on the idea of decentralization. However, as has been recently revealed, this may not be completely true for the blockchain. 35 shareholders of ConsenSys AG (CAG), have come together to request for a special audit of a deal that resulted in JPMorgan Chase acquiring an influential stake in two of Ethereum’s flagship products. The 35 former employees represent the majority of Ethereum’s CAG’s shareholders.
What is Consensys?
ConsenSys is a software development company that was founded by Joseph Lubin after co-founding Ethereum. The company is a major player in the crypto space and is valued at over $4.4 billion AUD. It is responsible for developing cryptocurrency-related infrastructure and is especially known for developing infrastructure critical for the Ethereum ecosystem including Metamask, the web 3 Ehtereum wallet. The company’s shareholders mostly consist of employees and now former employees.
35 former employees of the company who make up more than half of the shareholders want the deal that saw fundamental intellectual property, more specifically Infura and MetaMask transferred from CAG to ConsenSys Software Incorporated (CSI) a new entity. The deal, popularly known as Project North Star within CAG, saw JP Morgan get a 10% stake in CSI in exchange for offsetting a $39 million loan to Joseph Lubin, Ethereum billionaire and ConsenSys chief. According to the employees, the transfer of the intellectual property from CAG to CSI was done illegally as the shareholders were not informed about it.
Why it matters
This lawsuit is about much more than the fact that CAG was cheated out of its intellectual property and subsidiaries. It brings to light many failures of the Ethereum blockchain in terms of decentralization. Metamask and Infura are arguably the most critical infrastructure to the blockchain’s ecosystem. Infura for one is the node network that processes about 13 billion code requests every day. It provides developers with a way to connect with Ethereum without the need for running a full node.
Currently, CSI is the single provider that operates Infura which is dependent on Amazon’s cloud servers. This makes Ethereum vulnerable to a single point of failure. Now that JP Morgan owns a significant stake of this infrastructure, they basically own Ethereum.
JPMorgan’s move to get a slice of Ethereum is a reflection of the desire by many financial institutions to get into the crypto space. However, this could be counterproductive for Ethereum as it contradicts the whole philosophy behind the establishment of digital currencies, decentralization. It means major infrastructure that is critical for the Ethereum ecosystem is in the hands of a single entity.
FAQs
In 2021, J.P. Morgan's dedicated blockchain business unit, Onyx, developed the Onyx token (XCN).
What is the J.P. Morgan crypto warning? ›
These regulatory advisories warn that cryptoassets, including bitcoin and ether, may be susceptible to fraud, involve a high level of risk, and may experience significant price volatility, which may also adversely impact the price of swaps, security-based swaps, equity options, futures, options on futures, and OTC ...
What crypto is J.P. Morgan investing in? ›
Wells Fargo (WFC) and JPMorgan Chase (JPM) both reported holdings in spot bitcoin exchange-traded funds, and Twitter co-founder and former CEO Jack Dorsey forecast that bitcoin's price could climb to $1 million by 2030.
What is the JPM COiN platform? ›
Our inaugural product solution, JPM Coin, is a permissioned system that serves as a payment rail and deposit account ledger, that allows participating J.P. Morgan clients to transfer US Dollars held on deposit with J.P. Morgan within the system, facilitating the movement of liquidity funding and payments in right time.
Will XCN reach $1? ›
Onyxcoin would need to gain 62,801.66% to reach $1. According to our Onyxcoin prediction algorithm, the price of Onyxcoin will not reach $1. The highest expected price our algorithm estimates is $ 0.068696 by Jan 1, 2049.
Who is the founder of XCN coin? ›
The Onyx blockchain network was founded in 2014 by the venture capitalist Adam Ludwin with the backing of several other venture capital firms, providing a solution to modern financial systems.
What is the biggest scandal in crypto? ›
What are the biggest cryptocurrency scams in history? Some of the biggest crypto scams in history include the OneCoin scam (estimated $25 billion in losses), the BitConnect scam (approximately $4 billion in losses), and the Bitclub Network scam (up to $722 million in losses).
What is the red flag in crypto? ›
The red flags will depend on the nature of the virtual asset and the financial activity. Common red flags include: The size and frequency of transactions (multiple small amounts or multiple high-value amounts within hours) An irregular or unusual pattern of transactions.
What is the FBI warning on crypto? ›
The FBI warns Americans against using cryptocurrency money transmitting services that are not registered as Money Services Businesses ( MSB ) according to United States federal law ( 31 U.S.C. § 5330 ; 31 CFR §§ 1010; 1022 ) and do not adhere to anti-money laundering requirements.
What crypto is Warren Buffett investing in? ›
(NYSE:NU). Although Buffett has been openly critical of Bitcoin, referring to it as “rat poison,” Berkshire Hathaway has reaped significant gains via its stake in Nu Holdings. Initially investing $500 million in a Series G funding round and an additional $250 million later, Berkshire's involvement has paid off.
JPMorgan Chase's digital token, JPM Coin, is currently processing $1 billion in transactions daily, and the financial giant is planning on making the currency more widely available.
How to get JPM Coin? ›
Where To Buy JPM Coin. JPM Coin runs on a privately commissioned blockchain and is currently only available to a small number of institutional clients at the multi-national bank. This means that you can't find this coin on digital asset exchanges as you normally would for blockchain-based digital currencies.
What is the JPMorgan contract intelligence COiN platform? ›
Through its AI-driven Contract Intelligence platform, known as COiN, the bank has automated the document review process for a specific category of contracts. COiN utilizes unassisted AI, minimizing human involvement post-deployment.
What trading platform does JPMorgan use? ›
Morgan Money -- Global Trading Platform | J.P. Morgan Asset Management.
What is the XCN COiN? ›
Onyxcoin (XCN) is a decentralized digital asset that operates on the Ethereum blockchain. It serves as the governance and utility token for the Onyx Protocol, a decentralized platform that facilitates peer-to-peer lending and borrowing of various digital assets.
Where can I buy XCN crypto? ›
You can buy Onyxcoin on Kraken's crypto exchange. Create your free account and connect a funding method to buy over 200 cryptocurrencies including XCN.
How many XCN tokens are allocated to the chain DAO Treasury? ›
Some 10 billion tokens currently reside in the Chain DAO treasury.
