US Crypto Debit Card Launches, Cayman Islands Announces VASP Regulations, Enterprise Developments in Telecom and Transport, DOJ Seizes $1 Billion in Bitcoin



US Crypto Debit Card Launches, Cayman VASP Regs Announced, INX to List in Canada

By: Joanna F. Wasick

Paxful, a peer-to-peer marketplace, and BlockCard, a cryptocurrency fintech platform, recently announced the launch of a crypto debit card they say will enable users to convert cryptocurrencies to U.S. dollars at the time of purchase and will allow payments and the withdrawal of funds at over 45 million merchants and ATM locations worldwide. At launch, the card will be available only to U.S. users, but there are plans to expand into other regions. The card is touted as filling the void left by traditional banking to service unbanked populations.

The Cayman Islands recently announced its development of a regulatory framework for Virtual Asset Service Providers (VASPs) within its jurisdiction, as part of compliance with Financial Action Task Force (FATF) guidelines that were rolled out last year. According to the October press release, the regulations for VASPs will commence in two phases. The first begins immediately and focuses on the compliance, supervision and enforcement of anti-money laundering and counterterrorist financing rules that comport with the FATF and Cayman local guidelines. For example, prospective and existing VASPs will have to register with the Cayman Islands Monetary Authority. The second phase is slated for June 2021 and focuses on licensing requirements and supervision.

And late last week, the INX cryptocurrency and security token exchange announced that it plans to trade its INX token on the Canadian Securities Exchange after finishing its initial public offering (IPO). The IPO was the first security token offering registered with the U.S. Securities and Exchange Commission and is seeking to raise $117 million from U.S. investors.

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Blockchain Developments in Telecommunications, Transportation and Digital Identity

By: Robert A. Musiala Jr.

According to reports this week, a major U.S. telecommunications company intends to begin recording all of its public statements and press releases on a blockchain ledger in order to “combat misinformation online.” The initiative is called the Full Transparency project and it leverages a blockchain platform that was reportedly developed by the telecom firm in collaboration with a New York-based digital ad agency, the AdLedger blockchain consortium and blockchain adtech firm MadNetwork.

In the transportation industry, a major provider of dump truck logistics technology recently announced that it has joined the Blockchain in Transport Alliance (BiTA). BiTA is a blockchain consortium focused on developing blockchain standards for use in the transportation industry.

And in the digital identity space, a market research firm recently published a major report covering digital identity from technical, regulatory and market perspectives. The report focuses on how consumers are expected to use digital identity, how successful blockchain will be in the digital identity market, the effect of regulations, the emergence of new identity networks and leading digital identity companies.

For more information, please refer to the following links:

DOJ Seizes $1 Billion in Bitcoin from Silk Road, DOJ and CFTC Prosecute Crypto Fraud

By: Jordan R. Silversmith

Early Wednesday morning, a blockchain intelligence firm reported that a wallet possibly belonging to the early dark web market Silk Road moved more than $1 billion in bitcoin. This was the first reported transaction from the address since 2015, when it transferred 101 bitcoin to BTC-e, a now-closed crypto exchange allegedly favored by money launderers. Later, on Thursday, the U.S. Department of Justice (DOJ) announced that it had seized the more than $1 billion in funds. According to a press release, the DOJ used a blockchain analytics firm to identify the seized bitcoin as having been stolen from Silk Road by an unnamed individual referred to as “Individual X.” The seizure represents the largest cryptocurrency seizure to date by the DOJ. The Bitcoin has been transferred to a government-controlled wallet and the DOJ has filed a civil complaint for forfeiture of the funds. If forfeited, the bitcoin will be moved to the Treasury Forfeiture Fund.

Also this week, the DOJ announced that it had seized cryptocurrencies worth an estimated $24 million on behalf of the Brazilian government in connection with a large cryptocurrency fraud scheme. Brazilian authorities estimate that the scheme, dubbed “Operation Egypto,” has defrauded tens of thousands of Brazilians of more than $200 million. The individuals behind the scheme duped investors with the possibility of lucrative investments in cryptocurrencies, allegedly making false and inconsistent promises about the way funds were invested and exaggerating the rates of return.

The Commodity Futures Trading Commission (CFTC) this week announced that a federal court has ordered a Colorado company and its principal to pay over $900,000 for their role in a digital assets and forex Ponzi scheme. The court ruled that the defendants fraudulently solicited more than 72 clients to invest in commodity pools that purportedly traded in foreign exchange funds and digital assets, including bitcoin, and then misappropriated the money. In addition to civil monetary penalties and a ban by the CFTC, the order requires the principal and the company to repay defrauded investors.

A hacker has reportedly stolen over $24 million from Harvest Finance, a decentralized finance service that allows users to invest cryptocurrencies and then farm out the price variations for small profit yields. The hacker ended up stealing $13 million worth of USD Coin and $11 million worth of Tether, although the hacker returned $2.5 million to the platform two minutes after the hack. Harvest Finance authors are offering $100,000 to anyone who can return the remaining funds.

For more information, please refer to the following links:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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