News Updates August 23, 2022
1. Israelis Suspected of Defrauding the French Treasury and Laundering the Money via Crypto
Millions of euros were illegally obtained from the French Treasury during the pandemic.
Arrests were made; England and Canada have approached the Israeli police for assistance.
The French social services were defrauded via false claims and stolen identities during the pandemic. Unemployment benefits were illegally obtained, which amounted to millions of euros that were later laundered via crypto and transferred to Israel.
During the covid-19 lockdowns, the French government allowed businesses and companies that were affected by the lockdowns to receive immediate compensation.
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A group of individuals with dual-citizenship, Israeli and French took advantage of the fact the applications for compensation were not thoroughly examined.
Thousands of false applications were sent, defrauding the French Treasury. The French government became aware of the fraud; arrests were made but a large amount of the funds were never found.
2. Bitcoin price eyes $22K as US PMI data hits lowest since May 2020
2020
BTC price bounces and the U.S. dollar falls from fresh twenty-year highs as PMI numbers reignite talk of recession.
Bitcoin (BTC) headed for multi-day highs after the Aug. 23 Wall Street open as United States economic data tripped up the dollar.
*Dollar suffers as data shows incomes "squeezed"*
Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it eyed $21,700 at the time of writing, near resistance in place since last week’s near-12% drop.
The pair gained momentum as the U.S. Purchasing Managers Index (PMI) prints for August showed a drop versus the month prior, hitting the lowest levels since May 2020 at the height of the first round of COVID-19 lockdowns.
The S&P Global Flash US Services Business Activity Index posted at 44.1 in August, down from 47.3 in July, to indicate a further reduction in overall services activity,” a press release from curator S&P Global stated.
The inversely-correlated DXY had conversely gained rapidly in the days prior, this coinciding with U.S. stocks facing resistance and Bitcoin seeing multiple trips below $21,000.
“The Aug. PMI Composite Index fell to 45 from 47.7 in July. It was expected to rise to 49.2,” gold proponent Peter Schiff reacted.
The Services PMI tanked to 44.1, the lowest since May 2020 and Mfg. sank to 51.3, the lowest since July 2020. The U.S. PMI is weaker than any PMI in Europe or Asia.”
The S&P 500 and Nasdaq Composite Index were up a modest 0.25% and 0.45% at the time of writing, respectively
*BTC bulls face $21,700 challenge*
Analyzing what could be next for risk assets, commentators hoped for a rally in stocks on the back of a declining dollar.
*Bitcoin addresses in loss hit 1-month high as BTC price retests $21K*
Popular Twitter account Game of Trades called the S&P 500 “extremely oversold in the short-term” based on relative strength index (RSI) data.
“Watch out for all the potential bullish RSI divergences it has picked up along the way,” part of a fresh update read.
On Bitcoin, optimism from some likewise focused on a return to the range highs since June, with a “clean break” above $25,000 being the deal breaker for $28,000 or more to appear.
For on-chain analytics resource Material Indicators, meanwhile, it was $21,700 that needed to be cracked as a first step.
"If we don't see more BTC bids coming in above $21k, the downside illiquidity (dark areas) will be exploited," it warned alongside a chart of support and resistance levels on the Binance order book.
3. How Did Deepfake Tech Drain a Brazilian Crypto Exchange Out of Liquidity?
The bad actors used Hologram AI to impersonate Binance COO in Zoom calls.
Lazarus Group was exposed using malware in crypto jobs on LinkedIn.
A sophisticated scam using deepfake tech managed to drain liquidity from a Brazilian crypto exchange. In June 2022, the FBI issued a warning that fraudulent investment scams on LinkedIn are rising.
As LinkedIn is widely used for business networking, many find investment offers on the social media platform to be legitimate.
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Sean Ragan, the FBI’s special agent in charge of the San Francisco and Sacramento field offices said the following: "So the criminals, that’s how they make money, that’s what they focus their time and attention on. And, they are always thinking about different ways to victimize people, victimize companies.
"And, they spend their time doing their homework, defining their goals and their strategies, and their tools and tactics that they use.”
3. Rainbow Bridge Resists Another Hack, The Attacker Lost 5 ETH.
Cross-chain bridge Rainbow Bridge successfully repelled an attack by an unknown hacker, which he undertook on August 20. In an August 22 blog post, Aurora Labs CEO Alex SHEVCHENKO said that the weekend bridge attack was automatically suppressed within 31 seconds and that user funds were not affected.
The attack occurred after the attacker presented a fabricated NEAR block. The transaction required a secure deposit of 5 ETH. The system automatically rejected the fabricated block after the transaction was sent. As a result, the hacker lost his deposit, the user funds remained safe.
Alex Shevchenko added that someone tried to carry out a similar attack on May 1. He suggested that the attacker participate in the NEAR network's Layer 2 (L2) protocol bounty program instead of stealing user funds and suffering from laundering them.
4. Miami Trio Charged With Defrauding Banks and Crypto Exchange of Over $4M
The DOJ has been cracking down on crypto-related scams as lawmakers become more vocal about illicit activity in the space.
The U.S. Department of Justice (DOJ) has charged three members of a Miami crew in a cryptocurrency-related scheme that allegedly netted more than $4 million.
Authorities arrested Esteban Cabrera Da Corte, Luis Hernandez Gonzalez and Asdrubal Ramirez Meza on Tuesday, alleging the group used stolen identities to purchase millions of dollars worth of cryptocurrencies on a “Cryptocurrency Exchange” in 2020. The purchases were funded with bank transfers; after buying the crypto, the men disputed the transactions with the banks, tricking them into reversing the transfers and redepositing the money into accounts controlled by the crime ring.
The arrests come as pressure from lawmakers intensifies for a crackdown on bad actors in cryptocurrency spaces. In March, President Joe Biden signed an executive order calling upon government agencies to make greater overtures to combat illicit activities occurring throughout the crypto industry and to shut down scams.
5. Malaysian regulators add Huobi to investor alert list
The Securities Commission of Malaysia says Huobi is operating without official registration from local regulators.
The Securities Commission (SC) of Malaysia issued a statement on Monday regarding Huobi's operations in the country. According to the statement, the crypto exchange is now on the SC’s Investor Alert List.
Malaysian financial regulators say Huobi has been operating a digital asset exchange in the country without official registration with the SC.
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Huobi Global [https://huobi.com/en-us/] has been added to the SC’s Investor Alert List for operating a digital asset exchange (DAX) in Malaysia without being registered with the SC.
6. Former CFTC Chair: Here's How SEC and CFTC Can Work Together to Regulate Crypto
Forming a self-regulatory governing committee “might be a way to develop standards for this market,”
Former Commodity Futures Trading Commission (CFTC) Chairman Timothy Massad said current gaps in crypto regulation can be filled if the Securities and Exchange Commission (SEC) and the CFTC come together to form a self-regulatory organization (SRO).
Massad, now a research fellow at Harvard University’s School of Government, told CoinDesk TV on Monday that as it stands now, “neither agency has the power” to regulate cryptocurrency.
There is the gap. There's a gap with respect to regulation of what I would call the cash market for crypto assets, which are not securities," he said.
The SEC oversees the securities markets including stocks and bonds while the CFTC’s purview is in commodities futures such as agriculture and metals. The CFTC has taken a role in crypto because exchanges such as the CME have active futures markets in bitcoin (BTC) and ether (ETH). Meanwhile, the SEC has taken action against crypto firms because it deems some tokens as securities based on the way they are marketed to the public.
The issue is determining which U.S. agency regulates cash markets – such as buying crypto on exchanges like Coinbase (COIN) or Kraken. Several bills in the U.S. Congress are trying to address this question of how crypto is regulated. But Massad sees the better path in the two agencies joining together in an SRO.
“The SEC and the CFTC create a joint self-regulatory organization that they would oversee and they would pass on its rules,” he said on CoinDesk TV’s “First Mover.”
Self-regulatory agencies are commonplace in traditional finance. For example, the Financial Industry Regulatory Authority (FINRA), overseen by the SEC, creates and enforces rules on brokers and broker-dealers.
Massad, who led the CFTC for nearly three years during the Obama administration, said an SRO for crypto “might be a way to develop standards for this market.” It would also keep regulators from getting “bogged down” on the longstanding debate of whether something is deemed a security or a commodity.
Some in the industry propose having the crypto spot markets regulated by the CFTC. But Massad agrees with those who think the agency would not be fully able to handle it alone.
“The CFTC was underfunded when I was there,” Massad said. “We didn’t have the resources to do things that we really needed to do.”
7. Mark Cuban Blasts SEC Chief For Saying “No Reason To Treat Crypto Market Differently From Capital Markets”
Billionaire Mark Cuban took to Twitter on Monday to call out the chair of the US Securities and Exchange Commission (SEC), Gary Gensler, for his claims about the crypto market in a recent Wall Street Journal opinion piece.
“Come in and talk to who ? Set up an appointment how ? You using Calendly these days ? Since you understand crypto lending/finances, why don’t you just publish bright line guidelines you would like to see and open it up for comments ?” Cuban tweeted.
In Gensler’s now controversial opinion piece, the SEC chief claims there is no reason to treat the crypto market differently from capital markets. He asserts that the crypto market remains subject to securities law and urges industry stakeholders to speak with the SEC to gain clarity.
*The SEC’s Dodgy Tactics*
It is worth noting that the hesitance of the SEC to publish clear guidelines on the parts of the crypto markets it feels fall under its purview has been a cause for concern. Instead, the SEC has chosen to adopt a stance of regulation by enforcement. In addition, despite frequent statements by Gensler that the SEC is accessible and willing to discuss with industry participants, several reports have indicated that when industry participants reach out to the SEC, they get little or nothing in response but threats of lawsuits.
Notably, this was the case with Coinbase Lend in September last year.
8. Iranian Association Calls for Stable Crypto Regulation as Government Plans Widespread Use of Crypto in Foreign Trade
Iran’s association of importers has stressed the need for a stable regulatory framework for cryptocurrencies now that the Iranian government is officially using crypto to pay for imports. “By the end of September, the use of cryptocurrencies and smart contracts will be widespread in foreign trade with target countries,” a government official said.
*Imports Association: Iran Needs Stable Crypto Regulation*
Alireza Managhebi, the chairman of Iran’s Importers Group and Representatives of Foreign Companies (Imports Association), voiced concerns about the country’s crypto regulation Saturday, local media reported.
He stressed that a stable regulatory framework for cryptocurrencies should be established for cryptocurrencies to be successfully used as a means of payment for imports. Noting that crypto can be useful in this regard under the right regulatory infrastructure, Managhebi said:
The main question is whether the Iranian government has provided fixed rules for the use of cryptocurrencies that will not change for several months, and in the meantime businesses active in this digital field will not be harmed,” he detailed.
Managhebi noted that the government of Iran recently announced the official use of cryptocurrency to pay for imports. However, he clarified that the claim that this would immediately end the dollar dominance in Iran is not very accurate because both the dollar and cryptocurrency have their own places in the Iranian market.
Earlier this month, Alireza Peymanpak, vice minister of Iran’s Ministry of Industry, Mine and Trade and president of the country’s Trade Promotion Organization (TPO), said the first official import order was successfully placed with cryptocurrency. “By the end of September, the use of cryptocurrencies and smart contracts will be widespread in foreign trade with target countries,” he added.
9. Report: Nigerian Central Bank Targets Tenfold Increase in Number of CBDC Users, Governor Says Use of Cash Will 'Dissipate to Zero'
Despite the apparent slow embrace of the e-naira digital currency by Nigerians, the Central Bank of Nigeria governor has said his institution is targeting a tenfold increase in the number of users of the digital currency in the next twelve months. The governor predicted that the use of cash will “dissipate to zero” while the “use of digital currency will increase to become part of our lives.”
Some ten months after its launch, the app for the Nigerian central bank digital currency (CBDC) — the e-naira — has now been downloaded 840,000 times, a report has said. This revelation suggests that less than one million Nigerians have embraced the digital currency that the CBN touts as a better alternative to volatile cryptocurrencies.
The revelation of the number of times the e-naira app has been downloaded follows reports of growing Nigerian interest in cryptocurrencies. For instance, early this month, Bitcoin.com News reported that a survey had found Nigeria to be the country most obsessed with cryptocurrencies. Before that, a survey by Kucoin found that as many as 33.4 million Nigerian adults are holders of cryptocurrencies.
Even though the CBDC is still less popular than cryptocurrencies, the Central Bank of Nigeria (CBN) reportedly said it is hopeful of a tenfold increase in the number of e-naira downloads in the next 12 months. According to CBN governor Godwin Emefiele, the central bank’s ultimate objective is to ensure the CBDC is available to all Nigerians. Remarking on this objective, Emefiele, who spoke at a central bank-sponsored hackathon, said:
To ensure the CBDC becomes available to all Nigerian adults, the CBN revealed that starting on August 22, the e-naira will become available to unbanked adults. Emefiele reportedly said prospective users can access the e-naira by dialing 997 on their mobile phones.
Explaining why the CBN decided to introduce the digital currency, Emefiele said Nigeria had no choice but to embrace emerging technologies. The governor also predicted that the use of cash will “dissipate to zero” while the “use of digital currency will increase to become part of our lives.”
10. EU Stablecoin Ban Would Cause “Extreme Volatility,” Lobbyists Warn
The European Union’s Markets in Crypto-Assets legislation could effectively ban dollar-pegged stablecoins like USDT and USDC in 27 member states. Lobbyists have warned that the impact on the crypto market could be severe.
* Blockchain for Europe and the Digital Euro Association have sent a letter to the EU Council warning against the potential impact the proposed MiCA legislation could have on crypto.
* The lobbyists have warned that the framework could effectively ban the top three stablecoins in the EU and said that this would hurt the market.
* The letter calls for clearer guidelines that allow for dollar-based stablecoins to be traded within the EU's member states.
Blockchain for Europe and the Digital Euro Association have said that the ruling could cause “extreme short-term volatility” and “a major outflow of crypto activities outside of the EU.”
*Lobbyists Sound Alarm on EU Crypto Legislation*
Crypto lobbyists have warned that the European Union’s proposed Markets in Crypto-Assets regulation could be a disaster for the industry if it comes into effect in its current form.
In a letter to the EU Council, Blockchain for Europe and the Digital Euro Association have warned that MiCA’s plans to introduce restrictions on crypto tokens could impact USDT, USDC, and BUSD. According to their letter, the current MiCA guidelines would effectively ban the top three stablecoins in 2024, which would have severe spillover effects across the industry. The letter noted that a ban would cause markets “to seize up,” which would lead to “potentially destabilizing effects and a major outflow of crypto activities outside of the EU.”
The EU’s MiCA legislation proposes limiting issuance and use of tokens that are not denominated in an official currency of one of the union’s 27 member states. The proposal includes plans to introduce limits on tokens used as a means of exchange, something Blockchain for Europe and the Digital Euro Association have taken issue with since it could apply to stablecoins used for trading.
According to the letter sent to the EU Council, if the proposed legislation was implemented, it would cause “extreme short-term volatility,” “dislocation effects,” “fragmented liquidity,” and an exodus of crypto innovation from the EU. The letter said that the restrictions would incentivize users to use unregulated services outside of the EU and “compromise the EU’s efforts to take advantage of the potential of crypto and blockchain.”
