Technology

We couldn&t put together a conference in Berlin without inviting Valentin Stalf from N26, the co-founder and CEO of one of Europe's most promising startups.

A few years ago, few people would have bet on a startup creating a bank from scratch. N26 now has over 1.5 million clients and a ton of funding.

N26 originally launched at TechCrunch Disrupt London back in 2014. The company didn't win the Startup Battlefield. At the time, the company was called Number26 and they had 0 client. It was probably too early and too risky for our panel of judges. But we wanted to bet on them and give them some stage time.

I&ve covered N26 relentlessly over the years. They let me test the product back when everything was in German. They&re now available all around Europe (including the U.K.). And it always feels great when Startup Battlefield companies graduate and come back to Disrupt as regular speakers.

But N26 also faces a lot of scrutiny — all eyes are on that young company that wants to manage your money. N26 isn&t the only challenger bank either. Itstill fine for now as they&re all converting customers from traditional banks. But at some point, they&ll compete directly with each other.

Up next, N26 wants to expand to the U.S. Itan interesting market as ithighly fragmented with inconsistent regulation across all 50 states. And letbe honest, American banks suck. They&re riddle with fees and a bad customer experience.

If you want to hear how Stalf plans to go to the next level, come to Disrupt Berlin. The conference will take place on November 29-30 and you can buy your ticket right now.

In addition to fireside chats and panels, like this one, new startups will participate in the Startup Battlefield Europe to win the highly coveted Battlefield cup.

Valentin Stalf

CEO - Co-founder, N26

Born in Vienna, Valentin studied Accounting - Finance (M.A. HSG) at the University of St. Gallen, Sophia University in Tokyo and the Vienna University of Economics and Business Administration. During his studies he worked in a number of fields including Strategy Consulting and Investment Banking/Mergers - Acquisition. Before he founded N26 together with Maximilian Tayenthal, he was with the Internet Incubator Rocket Internet as Entrepreneur in Residence and involved in building different companies

The promise of Tether, the digital currency pegged 1:1 to the US dollar, was that it could provide the benefits of a cryptocurrency while providing a fiat -backed peg against price fluctuations.

But the currency has fallen below the $1 in recent weeks, right as a range of competing currencies are becoming available to meet the growing interest in the so-called &stablecoin& sector. Itcertainly not a coincidence.

Stablecoins are digital currencies pegged to a stable asset, such as gold or fiat currencies, or backed by collateral (that could also be a cryptocurrency), or even an algorithm that governs the approach to expanding and contracting the money supply. The goal of every stablecoin project is to achieve the scale and adoption of modern monetary systems, as a store of value and also as a medium of exchange.

As we see Tether decline in adoption, opportunities arise for a number of new exchange stablecoins to become the go-to-coin. At the moment, we are seeing a commoditization of the space, and it won&t be until when trading volumes picks back up again when a new (or perhaps the same) Tether arises.

Whatbeen going on with Tether lately

Tether (USDT), the largest stablecoin to date, seems to be in a terminal decline following intense scrutiny this year over dubious accounting practices. USDT is a widely tradable stablecoin created by Tether, a company run by the same executives behind the exchange BitFinex. Tether has been criticized for its failure to prove that the reserve has enough US dollar to back its digital currency on a one-to-one ratio, which it promises for its dollar-pegged cryptocurrency.

The pro-USDT narrative has been that despite its failure to provide transparency into its reserves and failing to acquire a proper audit, USDT is still the most widely traded stablecoin with significantly more volume than other stablecoin competitors. It previously compromised over 90% of market cap of all stablecoins and was listed on the most exchanges than any other stablecoin.

Nevertheless, that narrative seems to be breaking in the last 2 weeks. USDT has since seen its market cap go down by almost a third, from its peak of $2.8 billion to $2 billion in the course of 2 months.

In the past, users would purchase USDT via the Bitfinex platform for two major reasons, which is to buy bitcoin or transfer USD between countries. Given these two major applications, USDT has attracted users both outside and inside the cryptocurrency industry.

Recently, TechCrunch has gathered from investors that believe the price gap developed between Tether and USD is concerning. Because in the traditional markets, one would expect that big players and market makers would be capitalizing on that opportunity and closing the spread.

There have also been claims made by crypto researchers that Tether may be buying up USDT and planning to exit the stablecoin market. This can be driven by increasing scrutiny on the business and that having a stablecoin is no longer sensible and profitable for the company. There are increasingly signs pointing so on Tuesday this week when Tether announced that it has destroyed 500 million worth of USDT from the Tether treasury wallet.

Current stablecoin adoption and real world implementation are still in early stages. Despite more stablecoins getting introduced this year, there have not yet been any set of standards established for the space. If Tether really is winding down its market presence, that means there is room for other coin(s) to rise at least for the existing market demand. But really itabout stablecoins potentially going mainstream one day

Below is a brief look at the other coins coming on to the market, and what they have done so far.

The rise of the exchange stablecoins

A number of stablecoins have been in existence since 2017 but exchange stablecoins pegged to the dollar have been a big trend in the last few months.

Among the latest movers, crypto exchange Gemini issued the Gemini Dollar and financial blockchain solution Paxos issued the Paxos Standard. Both coins were approved by the New York Department of Financial Services (NYDFS) last month, which set a precedence for the first regulated, digital representation of the U.S. dollar to be approved in the US. Similar to Tether, both exchanges assert that their stablecoins will be fully backed by a USD reserve. Gemini touts that the balance will be examined monthly by an independent registered public accounting firm to verify the 1:1 peg. Paxos was listed a couple weeks ago on top cryptocurrency exchange Binance.

Unlike non-exchange tied stablecoins, exchange- tied stablecoins enjoy certain benefits by being directly and immediately being put to use when launched. With Tetherongoing issue in the last few weeks, we are seeing exchanges either double downing on their own stablecoin, or diversifying to multiple different stablecoins to ensure they can capture majority of the market. Exchanges are incentivized to have their own in-house stablecoin because it allows their customers to turn any of their portfolio tokens trading on the market into stabilized tokens that they can keep as reserve — without having to rush to exchange it into fiat and worry about their portfolio change in value. Once more people hold a common stablecoin, they can transact with each other more easily and the coin could potentially grow adoption that way. This thereby indirectly raises the market cap of the exchange.

In mid-October, other top exchanges also started picking up their adoption and introduction of their own in-house stablecoins. OKEx, one of the top three cryptocurrency exchanges by volume, listed TrueUSD, along with Paxos Standard, Gemini Dollar and Circlestablecoin USD Coin. Huobi, another top ranked exchange by volume, followed with the same listings.

Huobi also listed its own stablecoin solution, called HUSD, which initially is launching by being the stablecoin replacement on its own exchange. And just on Tuesday this week, Coinbase backed Circle in forming the new CENTRE Consortium, and announced the support for USD Coin (USDC).

On the side, we also see numerous existing institutions that have announced and are making way into stablecoins. PWC has started getting into stablecoin advisory through partnerships, while IBM most recently announced its exploration into stablecoins through a collaboration with Stellar by building a stablecoin on the Stellar blockchain.

Which stablecoin could go mainstream

For the launched tokens, the question now is: can they maintain their stability as their name alludes, and reach the adoption scale that Tether used to dominate

Success to the public will be the 1) number of exchanges these coins get listed on and their float, 2) the number of transactions and size of transactions committed, and now hopefully 3) ongoing verified amount of reserve.

There are a few early indicators of who is moving ahead, even as many stablecoin projects are still building out their products or are in the process of launching.

Despite recognizing the importance of Tether, the Binance research team has said that they are evaluating almost all the other stablecoins on the market to add to its platform.

Additionally, as reported by Coindesk this last week, HBUS, the U.S. affiliate of the Singapore-based Huobi exchange, have seen both deposits and withdrawals of USDT &increased by over 10x over the last two days,&.

Per the spokesperson: &For deposits, users are transferring their USDT into HBUS from other exchanges to take advantage of our USDT/TUSD trading pair. There has been over a 30% increase in trading on the TUSD/USDT pair over the last two days.&

It is important to note that HBUS still only ranks 129th by adjusted total trading volume according to CoinMarketCap. However, these anecdotes explain how a number of these newer stablecoins broke their one-to-one fiat peg this week, and rose above $1 rather than falling below it. At least it gets some investors excited.

But once a token trades below or above the peg, it misses the whole purpose of stablecoin. It is evident that we are still in the early stage of the market, and over time, the token should stay stable regardless of market conditions, regardless location, and truly weather the most volatile of market times.

As stablecoin is still such a new arena in the cryptocurrency world, one can probably expect further insolvencies or regulatory shocks like what we saw with Tether, but in a lesser magnitude. After all, it certainly is a positive sign that many of these exchange stablecoins are now being regulated and recognized legally, as it is crucial for US-operating crypto companies& adoption and scaling.

It will be most telling when trading volume returns to the scale of late 2017 to early 2018 time frame. As the market evolves, we may see true differentiation in the space, beyond yet another stablecoin maintaining reserves that are verified by a third party.

Two hackers who stole millions of users& data from ride-hailing firm Uber have been indicted on separate hacking charges related to a data breach at online learning portal Lynda, two people familiar with the case have told TechCrunch.

Vasile Mereacre, a Canadian citizen living in Toronto, and Brandon Glover, a Florida resident, were indicted earlier this month in Florida on federal hacking and extortion charges for stealing data on 55,000 Lynda users& accounts.

According to the recently unsealed indictment, the FBI was considering extraditing Mereacre from Canada, but federal agents later learned that he was planning to fly to Miami on October 16. Mereacre was arrested by FBI agents once he landed, and made his initial appearance in court — at which the indictment was unsealed.

The indictment accuses the two alleged hackers of obtaining tens of thousands of Lynda user accounts from a company-owned Amazon web server. Prosecutors accused the two of &exerting control over the accounts as a means to obtain money from LinkedIn.& Using a burner Protonmail email account, the two emailed LinkedIn and HackerOne, a bug bounty program used by Lynda, to disclose the breach.

&I was able to access backups upon backups,& one of the defendants wrote in their email. They also claimed to have usernames, passwords, payment data and backend code.

When an unnamed LinkedIn executive emailed back inviting the alleged hackers to its HackerOne bug bounty program, they said to &keep in mind, we expect a big payment as this was hard work for us.&

The two were released on a bond, and on condition that they are not permitted to use the internet. The case is now being heard in a California court.

The accusations are nearly identical to the circumstances around Uberbreach, just months earlier.

Uber disclosed the breach of 57 million worldwide users — including 4.1 million drivers — almost a year later. The company was accused of covering up the breach, after two former senior Uber executives — since fired — paid the two hackers $100,000 through its bug bounty to destroy the data that they obtained but without notifying customers or regulators.

Little was known about the hackers until Uberchief information security officer John Flynn told lawmakers at a Senate Commerce Committee hearing in February that the two hackers were from Florida and Canada.

Uber declined to comment.

The hackers gained access to an Amazon web server, owned by Uber, using credentials that were mistakenly left in a GitHub repository by an Uber engineer. According to an investigation by the Federal Trade Commission, the hackers downloaded more than a dozen files — including a backup file — containing Uber customer data. Itnot known what was said in the disclosure to Uber, but the FTC claimed the hackers were &demanding& a six-figure payout.

The breach was one of several scandals to plague the ridesharing company and the eventual departure of founder Travis Kalanick from the company.

Since the breach, Uber agreed to 20 years of privacy audits in a settlement with the FTC. The company was later ordered to pay $148 million in its breach settlement.

A spokesperson for the Justice Department did not respond to a request for comment, nor did Gloverpublic defender Michael Ryan. Mereacreattorney, Christopher Lyons, declined to comment. HackerOne did not comment.

LinkedIn spokesperson Mary-Katharine Juric said: &We appreciate the ongoing work by the FBI to pursue those believed responsible for the 2016 breach of Lynda user information. We will continue to engage with law enforcement as this case develops.&

Parts of Gloverdocket appear to have been withheld. Mereacre will appear in court on November 8.