Below are articles referencing more detailed precedence set in 2020. The subject matter is extensive. I highly recommend performing a “Ctrl+f” command to lookup any specific topics you are interested in. You can also search in the content for 2019.
WHO Encourages Use Of Contactless Payments Due To COVID-19- The World Health Organization has encouraged use of contactless payments due to COVID-19, or the coronavirus. “People should use contactless [payment] technology where possible,” a WHO representative told the Telegraph. South Korea’s central bank has quarantined physical notes for two weeks, and similar measures have been in place in China. The Bank of England recently acknowledged that banknotes in circulation can hold “bacteria and viruses” and that people should wash their hands after handling money.
Lloyd's Launches Crypto Insurance Services- Insurance behemoth Lloyd’s of London launched a new insurance policy to protect cryptocurrency holders against theft from hacks. With Cardiff-based startup Coincover, Lloyd’s started the Atrium syndicate to provide policies of up to £100,000 to protect against cryptocurrency theft. The policy has a “dynamic limit,” which Lloyds designed to take into account the changing prices of crypto assets, thereby indemnifying the underlying value of the assets, regardless of fluctuations over the policy period. Lloyds says this policy will help mitigate “these new risks and protect against theft – from physical as well as online vaults – thereby providing customers with the peace of mind that their assets are safe.” This is the first policy of its kind.
Bank of International Settlements Reckons With P2P Payments, Tokenized Securities, Central Bank Digital Currencies- The newest Quarterly Report from the Bank of International Settlements (BIS), released Sunday, deals with new trends in international payments in a special “shaping the future of payments” section. This follows the G20 announcement that “improving cross-border payments” would be a priority for 2020, as it is generally accepted that policymakers have not kept up with innovations in the payments sector. In the report, BIS General Manager Agustín Carstens emphasizes that Central Banks sit atop the payments system and will need to take more responsibility for its safety. A subsection of the report analyses how tokenization could transform the clearing and settlement of securities, and while the BIS determined that costs and complexity would be significantly reduced, there is no curb on the risk of one party failing to settle a transaction. The paper also contemplates Central Bank Digital Currencies (CBDCs).
Speculation Undermines Crypto Prices and Utility, Says Bank of England Senior Economist- In a staff working paper titled Blockchain Structure and Cryptocurrency Prices, a senior economist at the Bank of England presents a model for cryptocurrency price formation that considers both the financial market for coins and a fee-based market for blockchain space. The theory suggests that the limited settlement space in blockchains can lead to speculative activity crowding out monetary usage, therefore “higher speculative demand can reduce prices, contrary to standard economic models.” However, the paper concedes that if speculative transactions moved off-chain, with products such as cash-settled derivatives and second-layer scaling solutions like the Lightning Network, then “price volatility may fall and payments usage increase” for cryptocurrencies.
Australian Government Eyes Business Benefits in New National Blockchain Roadmap- The Australian Ministry for Industry, Science, Energy, and Resources released a National Blockchain Roadmap to provide a path for blockchain technology adoption in the country. The Australian government is investing hundreds of thousands of dollars in developing and implementing the technology in sectors such as supply chain management, credentialing, and financial services. While citing outside sources, the roadmap projects the business value of blockchain technology could even surpass $3 trillion by 2030.
Reuters: JPMorgan in Talks to Merge Blockchain Unit Quorum With Startup ConsenSys - Sources- Reuters reports that JPMorgan is contemplating a merger between their 25 person Quorum blockchain team and the Ethereum software developing startup Consensys. Quorum is a fork of the Ethereum blockchain that has customizable features for various enterprise solutions and is the foundation of the JPMorgan Interbank Information Network that is used by over 365 banks. Relatedly, Citigroup and Goldman Sachs completed an equity swap on a different enterprise blockchain platform developed by a startup called Axoni. In order to streamline the transaction, Citi built a dapp on Axoni’s Axcore blockchain and ran a blockchain node on location in one of their offices.
Bank of Japan Must Be Ready to Issue Digital Currencies: Deputy Governor Amamiya- Reuters reports that the Deputy Governor of the Bank of Japan (BOJ) said that the BOJ did not have immediate plans to introduce a central bank digital currency (CBDC) into the economy, however, he did emphasize the potential popularity of such a product in the Japanese market. The central banker said, “depending on how things unfold in the world of settlement systems, the public demand for CBDCs could soar in Japan … we must be prepared to respond if that happens.” Additionally, the Japanese messaging company LINE has announced a plan to offer their LINK tokens to the Japanese market as soon as April 2020 and institutional investors in the country will also have access to a new cryptoasset index consisting of BTC, BCH, ETH, LTC, and XRP.
Former CFTC Chair Launches the Digital Dollar Project- The former Chairman of the Commodity Futures Trading Commission, J. Christopher Giancarlo, and others such as Daniel Gorfine have partnered with Accenture to create the Digital Dollar Project. The Digital Dollar Project’s stated goal is to advance the exploration of a United States central bank digital currency (CBDC) and in the former Chairman’s words, “[a] digital dollar would help future-proof the greenback.” Internationally, CBDCs are piquing interest across multiple central banks that just created a working group with the Bank for International Settlements to share experiences and assess potential use cases in various jurisdictions.
CME's Bitcoin Options See First-Day Volume of $2.3M- The Chicago Mercantile Exchange launched Bitcoin options for trading. On the first day, 55 call option contracts were traded at 5 BTC each, which is a $2.3 million notional value. JPMorgan claimed in a research note that the bank sees ‘high anticipation’ for CME Bitcoin options from traders. Bakkt revealed Bitcoin options trading last month, and the Chairman of the Commodity Futures Trading Commission Heath Tarbert told reporters that regulated outlets for crypto derivatives trading will bring legitimacy to cryptocurrency markets.
The International Monetary Fund (IMF) released a report comprised of technical advice to improve the quality of monetary and financial statistics compiled and disseminated by the central bank of the Philippines. The report states, “[t]he Philippines may become an important market for crypto-assets, as the [central bank] recently authorized operations for three more virtual currency exchanges (VCE), bringing the total number of approved VCE to ten,” and then suggests the country should increase their monitoring efforts of these entities.
In South Korea, the Presidential Committee on the Fourth Industrial Revolution (PCFIR) proposed that Bitcoin trade on the country’s sole national securities exchange and crypto-derivative products be available to consumers because “it is no longer possible to stop crypto-asset trade.”
US Congressman Introduces Crypto-Currency Act of 2020- On March 9, U.S. Representative Paul Gosar (R-AZ) introduced the “Crypto-Currency Act of 2020,” a bill that looks to provide oversight over a broad range of digital assets and clarify which U.S. regulator is responsible for which digital assets Will Stechschulte, Gosar’s legislative assistant, explained to Cointelegraph, “the bill looks to provide not only clarity but legitimacy to crypto assets in the United States.” The proposal divides digital assets into three categories: crypto-commodity, crypto-currency, and crypto-security, and proposes that the three categories be governed by the Commodity Futures Trading Commission (CFTC), the Secretary of the Treasury via the Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC), respectively. While some speculate the bill is “dead on arrival,” it provides insight into what a comprehensive new law governing cryptocurrency could look like.
South Korea passes one of the world’s first comprehensive cryptocurrency laws- The South Korean National Assembly passed new legislation last week that provides a framework for the regulation and legalization of cryptocurrencies and exchanges. The vote was passed unanimously and would allow South Korea’s financial regulators to have better oversight of the developing industry and to develop rules around anti-money laundering and other forms of financial crime. South Korea was an early adopter of Bitcoin, which in turn invited early scrutiny from its legislature. The new vote represents South Korea’s commitment to remain on the cutting edge of the industry. Exchanges like Bithumb are partnering with Chainalysis to better comply with the new regulations.
India's Crypto Ban Overruled- The Supreme Court of India overturned the cryptocurrency ban put in place in 2018 by the Reserve Bank of India (RBI), which ordered financial institutions to break off all ties with individuals or businesses dealing in virtual currency. Banks can once again process transactions to cryptocurrency businesses. "Today, we have seen the highest judicial court of India understanding the potential cryptocurrencies can hold in an economy. It definitely comes as a lesson for the rest of the world that mass adoption of cryptocurrencies will need the support of friendly regulation—and that this regulation may be most proactively developed if both industry leaders and lawmakers engage in honest, reflective dialogue," said Neeraj Khandelwal, Co-founder of CoinDCX, one of the remaining Indian exchanges that originally petitioned to overturn the ban.
The US Department of Treasury Discusses Regulations with Crypto Industry Leaders- The Treasury Department held a meeting with cryptocurrency industry leaders Monday to discuss the challenges inherent in the regulation of cryptocurrency. “We must ensure the balance between innovation and national security,” said Treasury Secretary Steve Mnuchin. “We are spending a lot of time on this on both an interagency basis and with regulators.” Mnuchin also noted that “significant new requirements” are coming from the Financial Crimes Enforcement Network (FinCEN), and that the Treasury “wants to make sure the technology moves forward, but that [cryptocurrency] is not used like the old, swiss, secret-number bank accounts.”
G20 Urges Countries to Implement Crypto Standards Set By FATF- The 2020 G20 Finance Ministers and Central Bank Governors Meeting concluded in Riyadh, Saudi Arabia, with the issuance of a statement concerning financial markets and the world economy. The group of 19 countries and the European Union, which collectively represent over 80% of the world’s GDP, reiterated the urgency for member States to implement the recently adopted Financial Action Task Force (FATF) standards for virtual asset service providers. They additionally requested that the Financial Stability Board (FSB) develop a roadmap to enhance global cross-border payment arrangements by October 2020 and report on different approaches to technology-enabled-solutions for regulation and supervision.
New Zealand Plans to Drop 'Unfavorable' Sales Tax Treatment of Cryptocurrencies- New Zealand’s taxation authority, the Inland Revenue Department (IRD), released a policy issue paper concerning the application of goods and services tax (GST) to cryptocurrencies and is now seeking public comments. The IRD’s position is that “the current GST rules provide uncertain and variable GST treatment making, using or investing in crypto-assets less attractive than using money or investing in other financial assets.” The proposal would not change the taxation of gains derived from the acquisition and disposition of cryptocurrencies since they would still be considered property for income tax purposes, but the paper does suggest making the favorable GST treatment retroactive to 2009.
2019 Crypto Tax Guidance May Not Be Binding Per GAO- The U.S. Government Accountability Office (GAO) issued a report concerning the Internal Revenue Service (IRS) guidance for the treatment of virtual currency transactions and found “the IRS could do more to help taxpayers comply,” with their tax obligations. According to the GAO, part of the previous guidance released in 2019 “is not authoritative because it was not published in the Internal Revenue Bulletin (IRB). IRS has stated that only guidance published in the IRB is IRS’s authoritative interpretation of the law. IRS did not make clear to taxpayers that this part of the guidance is not authoritative and is subject to change.” Likewise, the IRS made a statement after changing the language on their virtual currency webpage. While they previously listed the in-game virtual currencies “Roblox [sic] and V-bucks,” from the games Roblox and Fortnite respectively, as examples of “convertible” virtual currencies alongside Bitcoin, they clarified that “transacting in virtual currencies as part of a game that do not leave the game environment (virtual currencies that are not convertible) would not require a taxpayer to indicate this on their tax return.”
Two Key U.S. Officials Speak On Issues Facing Blockchain Technology- High-level U.S. government officials addressed regulatory concerns regarding digital assets while speaking in their personal capacities at separate conferences. U.S. Securities and Exchange Commissioner Hester Peirce proposed a “safe harbor” for token issuers that was predicated upon the premise that “our securities laws stand in the way of innovation.” Commissioner Pierce’s proposal would give token issuers a three-year window after initial token sales for networks to become sufficiently decentralized in order to escape the purview of federal securities regulations. The proposed rule would require more tailored disclosures while retaining the anti-fraud protections and bad actor disqualifications currently in place. Additionally, Federal Reserve Governor Lael Brainard said the Fed is “conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including CBDC [Central Bank Digital Currency].”
Trump's 2021 Budget Proposal Seeks to Optimize Crypto Policing- The U.S. President’s Office of Management and Budget submitted their FY2021 budget to Congress, which includes a legislative proposal to “create new efficiencies” in the oversight of cryptocurrencies by moving the U.S. Secret Service back to the Department of the Treasury from the Department of Homeland Security. In Treasury’s annual itemized budget request it seeks to add 108 Special Agents to Internal Revenue Service Criminal Investigation (CI) in order to expand cyber and virtual currency compliance. The request asks for an additional $40 million for these efforts, which is estimated to identify $197 million in annual tax revenue from under-reported tax liabilities and fraudulent tax refunds. The size and scope of the expansion proposal coincide with the National Strategy for Combating Terrorist and Other Illicit Financing calling digital assets a key vulnerability in the financial system that is exploited by criminals.
California Aims to Foster Fintech Innovation. Don't Say Sandbox- In an interview with Bloomberg Law, the Commissioner of the California Department of Business Oversight said the agency planned to create an Office of Innovation in San Francisco to “keep our finger on the pulse of what’s happening in financial services and innovation.” The Commissioner clarified that the program would not be a regulatory “sandbox” because businesses in the program will still need all applicable state licenses before testing products on customers. The proposed Office of Innovation would also be charged with providing regulatory guidance to cryptocurrency businesses, but the agency reportedly wants to use existing legal frameworks instead of creating a new unique licensing regime for cryptocurrency companies, such as New York’s BitLicense.
Over 1,000 Bitcoin Miners Granted Licenses in Iran: Report- Iranian Bitcoin miners that consume more than 30 kilowatts of energy must have a license from the Ministry of Industries, Mining, and Trade. Over 1,000 licenses were issued according to local media citing officials from the Iranian Information and Communications Technology Guild Organization. The officials estimate that cryptoasset mining in the country has the potential to add $8.5 billion to the economy of Iran. A licensing regime is sharply contrasted to the country's previous hostility towards bitcoin miners; for example, last year over 1,000 bitcoin mining rigs were confiscated by the government.
Singapore Announces New AML Rules for Crypto Businesses- The Monetary Authority of Singapore (MAS) implemented Singapore’s Payment Services Act 2019, which requires cryptocurrency businesses to apply for a license before engaging in “Digital Payment Token” services. Officials from the MAS claim that the laws provide a “forward-looking and flexible regulatory framework for the payments industry.” Likewise, the Ukrainian Minister of Finance gave an interview to local media that discussed the applicability of new money transmission regulations to cryptocurrencies. The updated rules in both Singapore and Ukraine are purportedly in accordance with FATF guidance concerning virtual assets.
Most Canadian Crypto Exchanges Likely Fall Under Securities Laws, After New Guidance- A notice published by the Canadian Securities Administrators (CSA) provided regulatory guidance to industry participants about the applicability of Canadian securities laws to cryptoasset businesses. The notice clarifies that some “platform operators” held the view that if they only allowed trading of commodities, such as Bitcoin, then the Canadian securities laws did not apply. However, the CSA’s new position is that “platforms [that] are merely providing users with a contractual right or claim to an underlying crypto asset, rather than immediately delivering the crypto asset to its users … are generally subject to securities legislation.”
Congress Takes Step Toward a de minimis Tax Exemption- The Virtual Currency Tax Fairness Act of 2020 was introduced in Congress with bipartisan support. If passed, the bill would render virtual currency transactions with less than $200 of capital gains as de minimis, thus excluding these amounts from personal income for tax purposes. By extension, this would also allow people to exchange small amounts of virtual currencies without undergoing the recordkeeping burden of calculating capital gains or losses. Tax laws may be changing abroad as well. The South Korean government is reportedly considering a 20% tax on virtual currency capital gains and the new Russian Prime Minister has voiced his objective of taxing all cryptocurrency transactions
SEC Issues Alert About “Initial Exchange Offerings”- The U.S. Securities and Exchange Commission’s Office of Investor Education and Advocacy issued an alert clarifying that digital assets offered and sold to the public via Initial Exchange Offerings (IEOs) would be subjected to the same “facts and circumstances” analysis that ICOs undergo. At the state level, the Texas State Securities Board called cryptocurrency offerings a top threat facing investors in a newly published investment guide and New York Governor Andrew Cuomo’s 2020 agenda touched on virtual currency regulation. Governor Cuomo’s proposals included amending the Financial Services Law (FSL) so that entities licensed under the FSL, such as virtual currency entities, would be required to pay the Department of Financial Services in order to cover the costs associated with examinations and oversight.
The Qatar Financial Centre (QFC) Regulatory Authority recently clarified to reporters that “Virtual Asset Services may not be conducted in or from the QFC at this time.”
US Marshals Will Auction $40M in Bitcoin This Month- Later this month, the United States Marshals Service will auction over 4,040 Bitcoins that were forfeited in federal criminal, civil, and administrative cases involving the cryptocurrency. In order to bid on the multiple 500, 100, and 50 Bitcoin lots, the prospective purchasers must make a $200,000 deposit with the law enforcement agency. The auction listing indicates the Bitcoins were forfeited as a result of numerous cases led by the Drug Enforcement Administration (DEA), Federal Bureau of Investigation (FBI), Homeland Security Investigations-U.S. Customs and Border Protection (HSI-USCBP), Internal Revenue Service (IRS), United States Postal Inspection Service (USPIS), and numerous other civil and criminal cases. Relatedly, the DEA’s 2019 National Drug Threat Assessment discussed the role of virtual currency plays in the modern illicit drug trade, including the importance of unlicensed and peer-to-peer exchanges to drug vendors.
Man Pleads Guilty to Distributing a Designer Drug that Caused the Death of a Minor- A California man pleaded guilty for distributing the hallucinogenic designer drug 25I-NBOMe that led to the overdose death of a juvenile. The man imported the drugs using the now-shuttered Silk Road darknet market in 2012 and distributed the drugs to a middleman, who then sold the drugs to the boy. The boy fatally overdosed after taking four doses of the drug. For the death, the man was convicted of involuntary manslaughter in 2017 and was sentenced to six years in prison.
Illinois Man Sentenced to 13 Years for Trafficking Millions of Counterfeit Pills on Darknet- Last April a 24-year-old Illinois man pleaded guilty to trafficking at least 4.3 million counterfeit Xanax pills that he manufactured in “his unsanitary garage” for sale on darknet drug markets. He was just now sentenced to 13 years in federal prison for the drug charges and the subsequent money laundering operation that was required to obscure the source of the illicit funds. Similarly, a woman was indicted for allegedly distributing heroin and methamphetamine on Wall Street Market under the moniker “RaptureReloaded.” She was apprehended at the U.S.-Mexico border while attempting to enter the U.S. and if convicted on all counts, she faces a mandatory minimum term of five years’ imprisonment.
International and Domestic Criminals Face Justice For Crypto Crimes- Three federal cases involving cryptocurrency investment fraud developed this week. The founder of an allegedly fraudulent cryptocurrency investment scheme that raised $35 million from more than 100 investors has been criminally charged by federal prosecutors and civilly charged by both the Securities and Exchange Commission and Commodity Futures Trading Commission. Two Arizona residents were charged with similar crimes and a Michigan man has been sentenced to prison and ordered to pay over $208k in restitution for perpetrating a different cryptocurrency investment scam. Internationally, a darknet market drug dealer in England was sentenced to eight years and another alleged dealer was arrested in India.
Scams Dominate Crypto Crime in 2019- Chainalysis released its full Crypto Crime Report, breaking down the $11.5 billion worth of cryptocurrency transactions last year that were associated with criminal activity. Scams were by far the biggest type of crime in cryptocurrency in 2019 based on economic value, stealing roughly $4.3 billion worth of cryptocurrency from millions of victims. Download the full report here.
Two People Indicted For $30 Million Dollar Fraud Scheme Involving Blockchain Company- In parallel legal actions, the Department of Justice and U.S. Securities and Exchange Commission both charged an ICO issuer for allegedly using a fake identity to induce investments into a fraudulent ICO. The complaints claim that the issuer was previously sentenced to four years in prison in Canada from charges related to the mismanagement of a hedge fund, and this fact was concealed from ICO investors with the fake identity. Similarly, in another parallel action, a New York man was sentenced to 33 months in prison after the Commodity Futures Trading Commission found he viciously defrauded investors. Additionally, a New York doctor pleaded guilty to importing heroin and cocaine from the now-shuttered darknet market Dream Market.
Missouri Shuts Down Fraudulent Website and SEC Office calls “Digital Assets” a 2020 Priority- The Securities Division of the Missouri Secretary of State announced the issuance of a final order to cease and desist against an unregistered investment firm called Mavixbtc Limited, which promised 55% investment returns in as little as six days. The domain host for the company’s website complied with the order and took down the website after the company used an unknowing investment advisor’s FINRA registration as their own. Additionally, the U.S. Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) publishedtheir 2020 examination priorities, which includes inspecting SEC-registered market participants that are engaged in the digital asset industry.
Cryptocurrency Typologies Report: Your Guide to Who’s Who on the Blockchain- As cryptocurrency adoption increases, everyone from law enforcement to financial institutions needs to learn more about opportunities and AML risks in the industry. Our Typologies Report has you covered. Read to get the full, data-driven breakdown on the key players in the cryptocurrency industry, including mining pools, crypto ATMs, darknet markets, and more!
Crypto Exchange FCoin Insolvent After Revealing Up to $130M Bitcoin Shortfall- The cryptocurrency exchange FCoin, which is less than two years old, revealed that “internal system errors” gave the exchange a deficit of between 7,000-13,000 Bitcoins in its asset reserves. The CTO of the exchange said the exchange was not hacked, but instead the potential liability of over $130 million resulted from a flawed incentive structure whereby traders received too many financial incentives for transacting on the exchange. He also claimed that the problem was “a little too complicated to be explained in a single sentence.” The exchange is no longer processing withdrawals, but the CTO claims he will “compensate everyone for their losses.”
World’s Largest Bitcoin Mine Lures New Clients to Texas Hotspot- Japanese FinTech conglomerate, SBI Holdings Inc., and internet service provider, GMO Internet Inc., reportedly agreed to lease space in one of the largest cryptocurrency mining facilities in the world. The mining capacity would be rented from Northern Bitcoin AG, a German company that operates cryptocurrency mines in Rockdale, Texas, a city that was once home to an aluminum manufacturing industry but has recently pivoted to large-scale cryptocurrency mining. Relatedly, Bitcoin’s mining hash rate hit all-time highs this week as miners continue to contribute more computing power to the Bitcoin network across the world.
Two Chinese Nationals Indicted in DPRK-Linked Cryptocurrency Laundering Scheme- The United States charged two Chinese nationals with laundering more than $100 million in stolen cryptocurrency, acquired in a 2018 cryptocurrency exchange hack carried about by the North Korean state-sponsored malicious cyber group, Lazarus Group. Experts say that DPRK uses funds stolen from cryptocurrency exchanges to finance its weapons of mass destruction programs. The US Treasury’s Office of Foreign Asset Control (OFAC) placed sanctions on the two individuals, as well as 20 cryptocurrency addresses under their control. At the same time, the Department of Justice filed a civil forfeiture complaint naming another 93 cryptocurrency addresses and accounts. Together, these represent the largest action the United States has taken against North Korea’s cryptocurrency financing programs, coming just as North Korea resumed its missile tests for the first time in a few months. “The hacking of virtual currency exchanges and related money laundering for the benefit of North Korean actors poses a grave threat to the security and integrity of the global financial system,” said Timothy J. Shea, U.S. attorney for Washington.
Dutch Authorities Arrest 2 in Million-Euro Crypto Money Laundering Investigations- A statement issued by the Joint Chiefs of Global Tax Enforcement (J5) says the Dutch Fiscal Intelligence and Investigation Service (FIOD) arrested two separate Dutchmen in connection with two criminal investigations on suspicion of money laundering using cryptocurrencies. One of the cases involved laundering Bitcoin through the mixer Bestmixer.io prior to the service’s shutdown in May 2019. The FIOD shared data that was seized during the investigation of Bestmixer.io with the other J5 countries. Based on that data, “it cannot be ruled out that more international investigations by J5 countries will follow.” Additionally, a man pleaded guilty to conspiracy and tax evasion charges after defrauding more than 70,000 victims out of $147 million in a sham ICO of “Gem Coins,” whose tokens the defendant claimed were backed by billions of dollars’ worth of precious gems. Also, a former Microsoft software engineer was convicted of 18 federal felonies for stealing more than $10 million in gift card balances and selling them for Bitcoin, which was then laundered through an unnamed Bitcoin mixing service.
Ohio Resident Charged with Operating Darknet-Based Bitcoin “Mixer,” which Laundered Over $300 Million- The operator of the Helix bitcoin mixer was charged with money laundering conspiracy, operating an unlicensed money transmitting business, and conducting money transmission without a D.C. license. “The indictment alleges that Helix moved over 350,000 bitcoin – valued at over $300 million at the time of the transactions – on behalf of customers, with the largest volume coming from Darknet markets.” Furthermore, the mixer allegedly “partnered” with the darknet market AlphaBay to provide bitcoin laundering services while AlphaBay was still operating as one of the largest darknet markets in the world. Belizean law enforcement authorities executed a search warrant for a residence leased in Belize by the defendant, which allegedly led to substantiating evidence, according to the indictment.
Senior Adviser To “Silk Road” Operator Pleads Guilty In Manhattan Federal Court- A Thailand-based Canadian citizen, Roger Clark, who went by the moniker “Variety Jones” on the Silk Road darknet market pleaded guilty to one charge of conspiracy to distribute narcotics after being extradited to the United States. Clark was described as a “real mentor” by Silk Road founder Ross Ulbricht and may have even recommended that Ulbricht assume the name “Dread Pirate Roberts” or “DPR” in an attempt to develop a cover story regarding ownership of the website. The Canadian was paid hundreds of thousands of dollars for advising on security vulnerabilities on the site, technical infrastructure, and rules governing buyers and sellers on the site. Likewise, two other darknet market drug dealers pleaded guilty to their charges related to selling marijuana and fentanyl analogues.
Cryptocurrency Terrorism Funding Is Growing More Sophisticated- Bloomberg covers another excerpt from the Chainalysis Crypto Crime report, which analyzes the increased sophistication of cryptocurrency terrorism fundraising campaigns. In particular, a 2019 campaign from the Izz ad-Din al-Qassam Brigades (AQB), the military wing of Hamas and a designated terrorist organization, collected cryptocurrency donations worth tens of thousands of dollars with roughly double the number of individual donations in less than half the amount of time compared to a terrorism financing campaign that ran from 2016-2018.
FCA Becomes AML and CTF Supervisor of UK Cryptoasset Activities- The United Kingdom’s Financial Conduct Authority (FCA) is now the regulator charged with enforcing cryptoasset anti-money laundering and counter-terrorist financing (AML/CTF) regulations following the implementation of the European Union’s Fifth Anti-Money Laundering Directive (5AMLD). Cryptoasset businesses are now required to register with the agency before providing services within the country, and the regulatory regimecovers cryptoasset reporting requirements, supervision, and enforcement.
Money Laundering in Cryptocurrency: How Criminals Moved Billions in 2019- Fortune covered an excerpt from the anticipated Chainalysis 2020 Crypto Crime Report in which Chainalysis used blockchain analysis to expose how corrupt OTC brokers established a money-laundering infrastructure to move billions in illicit funds. For example, by analyzing transaction patterns, Chainalysis created a “Rogue 100” list of 100 suspected OTC brokers that are laundering illicit cryptocurrency proceeds on exchanges. The “Rogue 100” received more than $3 billion worth of Bitcoin over the course of 2019 and played an important role in the PlusToken scam.
French Court Says Bitcoin is Money- A French court has ruled that Bitcoin is money, which could prompt more activity in the French cryptocurrency market. The ruling concerns repayment of a loan made to crypto investment company BitSpread by Paymium, an exchange based in Paris. The loan was made in 2014 prior to the 2017 hard fork that created Bitcoin Cash. Paymium claimed Bitspread owed a portion of the Bitcoin Cash it obtained as part of that hard fork. The court ruled that it did not, comparing Bitspread’s Bitcoin Cash to dividends earned on an investment, and demonstrating the court’s understanding of Bitcoin as a fungible asset, like money.The story was first covered in French in Les Echos last Sunday.
Two High-Profile Criminal Defendants Plead Not Guilty to Crypto Crimes- Reginald Fowler, an Arizona businessman that once owned a minority stake in the NFL’s Minnesota Vikings and was indicted for operating an unlicensed money transmitting business last year, rejected the prosecution’s plea offer. The offer to plead guilty to one felony and forfeit $371 million was formally withdrawn after Fowler would only agree to forfeit the funds still remaining in approximately 50 identified bank accounts. Fowler’s trial is scheduled to begin in April of this year. Similarly, Ethereum developer Virgil Griffith pleaded not guilty to accusations that he violated the International Emergency Economic Powers Act after presenting at a North Korean cryptocurrency conference last year. Griffith allegedly violated the U.S. sanctions regarding North Korea when he provided technical information to the attendees of the conference that would facilitate money laundering and sanctions evasion.
Victims paid $144 million in bitcoin as ransom over last six years, says FBI agent- In a presentation from Joel Decapua, a supervisory special agent in the Global Operations and Targeting Unit (GoTu) within the cyber division at the Federal Bureau of Investigation (FBI), a slide showed that according to FBI data, victims have paid $144.35 million in bitcoin as ransom during 2013-2019. In his presentation, entitled “Feds fighting ransomware and how you can help,” Agent Decapua discussed collaboration with the industry especially with regard to major encryption technologies and what he described as the broader “cybercriminal ecosystem” of rogue virtual currency exchanges, encrypting services for malware, hacking forums, counter-anti-virus services, and marketplaces that sell access to private networks. The FBI’s response to these bad actors? “Lock them up, take their stuff, break their things,” said Agent Decapua.
Halting $9.8 Billion in Theft Is Key to Crypto Growth, KPMG Says- KPMG released a report Monday that claims that at least $9.8 billion in digital assets have been stolen by hackers since 2017 because of bad code and weak security. The report asserts that improving security is the key to growth for the $245 billion digital asset industry. “Institutional investors especially will not risk owning crypto assets if their value cannot be safeguarded in the same way their cash, stocks and bonds are,” Sal Ternullo, co-leader of KPMG’s crypto-asset services and co-author of the report, said. Even the established financial institutions, with the most mature compliance programs, must “enhance their methodologies to address the unique considerations for crypto-assets and related data-management challenges,” the report said.
Drug Dealer Loses £45m Bitcoin Fortune After Hiding Codes in Fishing Rod Case- An Irish cannabis grower purchased 6,000 Bitcoins with illicit proceeds in 2011 and wrote down his private keys on paper, which was then hidden inside a fishing rod case. Once he was arrested for cannabis-related offenses, his landlord discarded the fishing rod case, which was sent to a landfill and then to waste incinerators in China and Germany. The Irish Criminal Assets Bureau told media outlets that they are monitoring the public keys in case the Bitcoins move, but without the private keys the whale-sized Bitcoin fortune will remain inaccessible.
Dutch Police Hunt for Mail Bomber Who Demanded Bitcoin Payoff- A string of mail bombings across the Netherlands are suspected by police to be related due to the packages similarly demanding a Bitcoin ransom in order to stop the attacks. While there were no serious injuries reported, the latest two parcel bombs were the first to detonate in the mailrooms of their destinations, a large Dutch bank called ABN Amro and another unidentified Dutch business in the city of Kerkrade. An Amsterdam police spokeswoman would not disclose how much Bitcoin was demanded to the New York TImes, but officials compared the size of the blasts to small fireworks explosions that would have caused nonfatal injuries had anyone been holding them.
Bad Actors Rent Hashing Power to Hit Bitcoin Gold With New 51% Attacks- Bitcoin Gold (BTG) is a fork of the Bitcoin blockchain that occurred in 2017 and currently has a market capitalization of over $200 million. The Bitcoin Gold blockchain was maliciously mined with rented mining power from NiceHash and two double-spends occurred this week. Another Bitcoin fork, Bitcoin Cash (BCH), had miners propose a ZCash-style development fundthat would pay a portion of all BCH block rewards to a Hong Kong corporation that would promote the development of BCH. Bitcoin (BTC) also had a series of Bitcoin Improvement Proposal (BIPs) for the Taproot/Schnorr soft fork that would fundamentally change the privacy features of the Bitcoin blockchain.
London Judge Freezes Bitcoin From Ransomware Attack- A British court has ordered to freeze a nearly $1 million Bitcoin ransomware payment sent from an undisclosed Canadian company and subsequently deposited at the cryptocurrency exchange Bitfinex. The Canadian company’s insurance provider used Chainalysis’s investigative software tools in order to determine that the funds were deposited at the exchange. In the U.S., a Colorado man pleaded guilty to racketeering charges related to working as a moderator on the prolific darknet market AlphaBay, where he settled over 20,000 disputes between vendors and purchasers. Additionally, a San Francisco pill manufacturer was sentenced to over 16 years of prison after selling thousands of fentanyl-laced counterfeit oxycodone on darknet markets. The manufacturer admitted to making over $400,000 in Bitcoin from the scheme and used unlicensed bitcoin brokers to launder the profits.
How A Single Apple Mac Hack Scored North Korean Spies $7 Million In Cryptocurrency- Forbes covers an excerpt from the anticipated Chainalysis 2020 Crypto Crime Report that takes a deep dive into the cryptocurrency exchange hacks of 2019. Notably, “2019 saw more cryptocurrency hacks than any other year,” even though there have been worse years in terms of USD losses. One of the hacks scrutinized is the stolen funds from DragonEx, which is widely believed to be the work of the Lazarus group, an infamous cybercriminal syndicate linked to the North Korean government. Reuters also reports that U.N. sanctions experts are warning people to stay away from an upcoming North Korean cryptocurrency conference.
Should Banks Expect Cyberattacks from Iran?- Escalating tensions in the Middle East prompted the Cybersecurity and Infrastructure Security Agency (CISA) to issue an alertregarding the potential of an Iranian cyber response to the U.S. military strike in Baghdad. The Governor of Texas claims that attempted Iranian cyberattacks on state-owned systems have already increased and U.S. government websites have already been defaced with anti-American and pro-Iranian rhetoric, but there is currently no confirmation that the attack was state-sponsored. Financial media outlets are attributing the recent Bitcoin price spike to the conflict with Iran, touting the cryptocurrency’s role as a safe-haven asset.
BA in Economics. BS in Finance. Hostess of the Crypt Keepers’ Club. Passionate about research, and processing data. I don’t fold sheets, I spread them.
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