Exchanges Expand in US and Gibraltar; India Supreme Court Ruling Favors Industry
By: Robert A. Musiala Jr.
Late last week, a major global messenger app based in Japan announced that it has launched BitFront, a new global cryptocurrency exchange that is based in the U.S. According to a press release, BitFront is currently open to U.S. customers and “supports five major cryptocurrencies, including LINE’s digital currency LINK, Bitcoin, Ethereum, Bitcoin Cash and Tether, in 15 languages.”
Also late last week, Xapo, a major cryptocurrency wallet and cold storage custody provider, announced that it has received a DLT Providers License by the Gibraltar Financial Services Commission. According to a press release, among other things, the license will allow Xapo “to use distributed ledger technology for storing or transmitting value belonging to others by providing dealer services and by issuing fiat stabilised virtual assets.”
In a major development in India, this week the India Supreme Court struck down a 2018 decision by the Reserve Bank of India that had banned banks from servicing accounts related to cryptocurrencies. According to reports, the decision could result in increased liquidity and activity for cryptocurrency exchanges in the India market.
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Crypto Custody Report Published, Power Plant Installs Mining Operation
By: Veronica Reynolds
At least $9.8 billion in digital assets native to public blockchains has been stolen since 2017, according to a recent report published by a global accounting firm, highlighting a unique opportunity for market participants to devise new custodial solutions. According to the report, with no central management or governance in place, digital assets secured on public blockchains require tailored custody solutions that provide regulatory compliance as well as innovative and modern security operations designed to minimize risk exposure without sacrificing transaction processing speed and resiliency. The report notes that custodial providers that meet these unique challenges are poised to profit as digital assets continue to proliferate among institutional investors.
According to a report published this week, in New York, a power plant is generating roughly $50,000 every day from the nearly 7,000 mining rigs installed on its facility. Using self-generated electricity reportedly allows the power plant to take advantage of a unique and favorable market position, which the company believes will allow it to maintain profitability even after the halving event in May reduces bitcoin’s block reward.
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20 Bitcoin Addresses Added to OFAC List, DOJ Charges Detail $100 Million Crypto Hack
By: Jordan R. Silversmith
This week, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) added to its list of sanctioned individuals 20 new bitcoin addresses related to two individuals who are accused of being linked to the Lazarus Group, a cybercrime group possibly affiliated with the government of North Korea. According to a grand jury indictment unsealed Monday, the two individuals are charged with conspiracy to launder monetary instruments and operating an unlicensed money transmission business. The two individuals, both Chinese nationals, are accused of laundering over $100 million in cryptocurrency from a hack of an unnamed cryptocurrency exchange in April 2018. The hack is linked to Lazarus Group, a U.S.-designated North Korean state-sponsored malicious cyber group that has been accused of stealing more than half a billion dollars in crypto since 2018, when a cybersecurity vendor claimed the group had targeted 14 different exchanges in two years.
The Department of Justice’s press release alleged that some of the laundered funds helped North Korean actors continue hacking campaigns against other financial industry participants, including the theft of approximately $48.5 million in cryptocurrencies from a South Korean exchange. Aiming to combat similar attacks, the Treasury convened a cryptocurrency working session with industry leaders to discuss supervisory and regulatory challenges facing digital assets.
A report released this week by a cybersecurity company detailed the uptick in the use of cryptocurrency to launder money by organized crime groups in Latin America. The report discusses how organized crime groups and cartels in Latin America are profiting off the advances in digital banking and money transfers by operating extensive schemes that target banks, hospitality services and retail businesses. While Latin America is often overlooked because of the association of hackers with Russia, Iran and the Asia-Pacific region, the report argues that the marriage of violent drug gangs and the underground hacking community makes Latin America a burgeoning hot spot for cybercrime.
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SEC Charges Actor Steven Seagal With Unlawful Touting of a Digital Asset Offering
By: Teresa Goody Guillén
On Feb. 27, 2020, actor Steven Seagal became the third celebrity to settle charges with the U.S. Securities and Exchange Commission (SEC) for unlawfully touting an initial coin offering (ICO). The SEC’s order against Seagal finds that he violated the anti-touting provisions of the federal securities law by failing to disclose that he was promised $250,000 in cash and $750,000 worth of B2G tokens in exchange for his promoting Bitcoiin2Gen’s ICO. For example, the SEC contends that Seagal encouraged the public not to “miss out” on Bitcoiin2Gen’s ICO on his public social media accounts. Without admitting or denying the SEC’s findings, Seagal agreed to pay $157,000 in disgorgement, which represents his actual promotional payments, plus prejudgment interest, and a $157,000 penalty. Seagal further agreed not to promote any securities, digital or otherwise, for three years.
Previously, on Nov. 29, 2018, professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled, known as DJ Khaled, settled charges with the SEC for unlawfully touting initial coin offerings. The SEC initially issued a statement in November 2017 urging caution regarding celebrity-backed ICOs, warning that celebrity endorsements encouraging the public to purchase stocks and other investments “may be unlawful if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement.”
In news from overseas, a report published this week by a Swedish newspaper exposed what is believed to be a major fraud scheme allegedly based out of Ukraine that has targeted “more than 1,000 victims from more than 50 countries around the world.” According to the report, the fraud scheme targets senior citizens with fake investments in cryptocurrencies.
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