Crypto Kid Had a $23,000-a-Month Condo. Then the Feds Came.

The “kid” was 19-year-old Stefan Qin, who was a math genius from Australia. He dropped out of college and started a hedge fund in New York. He told his prospective fund clients that he had developed a secret cryptocurrency trading method. Called Tenjin, the technique was to arbitrage currency prices worldwide and profit on the small differences in those prices. After a year in operation, he claimed to have returned over 500% profit to clients. After that news, new clients started to flock to his fund. According to the Feds, the reality was that Stefan had created a convincing Ponzi scheme that robbed over 100 clients of more than 90 million dollars. With the stolen funds, Stefan lived a lifestyle of the rich and famous. Stefan’s Ponzi cryptocurrency fund wasn’t the first and won’t be the last. Ponzi schemes claim to offer investors ridiculously high returns, and that offer should be a huge red flag for anyone considering an investment. But greed can interfere with the best judgment of many people. There are currently 100s of cryptocurrency funds worldwide, with plenty being run by college-aged “wiz-kids” like Stephan. So beware and be careful with your investments.  

Read the full story and don’t let this happen to you.

ElectronRAT Malware steals private keys

New “ElectroRAT” trojan malware infects 1000s of Electron wallets. It affects all major operating systems: MacOS, Linux and Windows. Name name ElectroRAT comes from the fact that it infects Electron applications and RAT means Remote Access Tool. The RAT part is how it takes control of infected machines. It logs keystrokes, takes screen shots, and can download more software. The ultimate goal of this malware is to discover your wallet and private keys. A user is first infected by downloading compromised software from legitimate websites.
See more here: https://threatpost.com/electrorat-drains-cryptocurrency-wallet-funds-of-thousands/162705/

How To Check A Suspicious Address

Twitter Accounts Hacked – Followers Scammed

EOS Exit Scam

From Decrypt.co, 04/23/2020: potential exit scam has struck the EOS community, a report revealed on Monday. A Chinese digital wallet dubbed “EOS Ecosystem” disappeared, taking with it an estimated $52 million in customer funds.

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Free Cryptocurrency Giveaway Scam

None of these are giving away any bitcoin or other cryptocurrencies. Be wary of anyone promising to double any bitcoin you send them as this setup is always a scam.

Posted by Cryptocurrency Complete Guide on Wednesday, May 20, 2020

Uber (the ride-sharing app/company) is entering the health field with its healthcare subsidiary, Uber Health. Uber Health will partner with the startup, Solve.Care. Solve.care uses the ethereum blockchain to manage and provide medical patients access to affordable and accessible non-emergency medical transportation. It has been estimated that 1000’s of miss appointments due to lack of transportation. Patients on Uber Health will be able to schedule rides on the Solve.Care network. And they won’t even need the Uber app to do so. Costs for the trip can be paid for directly, or easily shared with employers and/or family members, and others. Traditional payment systems can be used (like credit cards) or the Solve.Care native ethereum token can be used. This service should be up and running sometime this year in 2019. Uber is also part of the association, along with Facebook, which is creating the new Libra stable coin.

You can read more about this Uber Health and Solve.care patient transportation system on Forbes.com

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Today, Channel News Asia reported on Switzerland’s attempt to stop cryptocurrency companies from fleeing the country. A big cause of these departures has been the local banking rejection of bitcoin business. Interestingly, it is the Swiss regulators who are making the effort to halt the exodus.

Swiss business experts fear that the flight will continue as other countries with a more accommodating banking attitude towards cryptocurrencies will lure away more business.

Switzerland has long been a major international banking center and even though the cryptocurrency sector is currently only a small slice of that pie, it is considered to be a major employment growth driver for the near future.

The Swiss canton of Zug has been called “Crypto Valley” and is home to 100s of cryptocurrency companies. But the finance director of Zug is concerned that many of these job-generating startups may leave if they can’t get sufficient access to the banking system. The country of Liechtenstein, as well as a few others, have already been pulling some of these companies away. The crypto startups need a way to store and use the funds that they raise via ICOs. They can’t purchase equipment, nor pay bills and salaries without banking access.

A big part of the problems for the banks is that they need more clarity as far as what rules and regulations the Swiss government plans for cryptocurrencies. The banks don’t want to start opening accounts and lending money to startups only to later find that they are violating the law.

They also have a great fear of working with early-stage crypto companies which do not follow all regulations when launching their ICOs. The startups must understand and conform to KYC and AML regulations, otherwise, the banks will also be liable.

Of the more than 250 banks in Switzerland, only a few ever allowed cryptocurrency related business accounts and possibly only two still do. Zuercher Kantonalbank, one of the largest banks in Switzerland and an early welcomer of cryptocurrency projects, stopped being accommodating last year. It was large banks like this on which initially give Switzerland a big boost in attracting cryptocurrency startups. At one time Switzerland was ranked as the number two country in the world in terms of ICO funding. Its ranking has now dropped to sixth.

Top destinations for cryptocurrency ICO projects now are the Cayman Islands, the British Virgin Islands, and Liechtenstein.

To combat this drain, Switzerland’s banking regulators are working to clarify the AML rules and regulations for ICOs. The intent is to reassure banks that they can clearly and legally work with the crypto startups. But at the same time, Switzerland wants to ensure that they don’t become a haven for ICO scams and other financial crimes.

Do you think that Switzerland should loosen their banking laws, or say good riddance to those ICO startups?

Read the full Channel News Asia report here
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Today, Business Insider reported that Special Counsel Robert Mueller has indicted 12 Russian intelligence officers in connection with the attempt to sway the American 2016 presidential election. In the indictment, it is alleged that this group of conspirators used bitcoin in order to make some of the purchases necessary for their activities. The Mueller investigation claims that they were able to track some of these bitcoin transactions to tie the defendants to several of their purchases.

It is claimed that the 12 Russians used almost $100,000 of bitcoin to rent computer networks in countries as far-flung as Romania and Malaysia. With these funds, they also purchased and/or rented computer servers and VPN networks in the US in order to further distribute and obscure their identities.

By using bitcoin for these transactions they were able to cloud their true identity, but these transactions still left tracks. These faint trails, when added together, pointed to those indicated, claims Mueller. Examples of the tracks were the usage of the same computers for bitcoin payments as were used for the email hacking, domain name purchases and for the previous election-related malware activity.

It is further charged that the Russian hackers created 100s of fake IDs, social media accounts, and email addresses to order to appear like a large, unrelated and diverse number of people. People who were interested in electing one candidate vs the other. With these fake accounts, they created 100’s of 1000s of semi-automated social media posts to promote one preferred candidate and to disparage the other.

One well-publicized hacking targeted the emails of members if the Democratic National Committee and the Hillary Clinton campaign. Some think that President Trump’s explicit public call on July 27th 2016 for the Russians to hack Clinton’s emails may have been a catalyst. Although these Russians are alleged to have been trying to hack the DNC for months, Mueller claims that the first attacks directly on Clinton’s email servers started on that same day as Trump’s suggestion after he wrote:

“Russia, if you’re listening, I hope you’re able to find the 30,000 emails that are missing,”

Trump later said that his suggestion was only in jest.

The indictment against these 12 include charges of 2 counts of conspiracy, 8 counts of identity theft, and 1 count of conspiracy to launder money using cryptocurrencies and bitcoin.  It is important to note that no Trump campaign members, nor American citizens were charged in this indictment.

Read the full Business Insider report by Allan Smith here

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Today, Business Insider provided some useful tips to help you try to spot a cryptocurrency ICO scam.

These scams are on the rise for two reasons:

1. Tales of instant cryptocurrency multi-millionaires have fired the imagination of main street investors who want to get rich easily. They have read stories of people who have purchased ICOs early and ridden the price rise to early retirement and a carefree lifestyle. They want to be one of those people but they don’t want to do the dirty research work required to intelligently pick an potentially good ICO.
2. Crooks are quickly discovering that they can easily capitalize on reason #1 by creating ICOs – or at least the appearance of an ICO.

An example of a typical scam is an ICO which promises riches to the investor. But it is only a classic Ponzi scheme. Early investor funds are partially used to pay off later investors. The founders keep skimming off some of the invested funds into their own pockets. Then a day comes when they are discovered for the scam they really are. This discovery usually happens because new investors stop coming in and the ICO is no longer able to maintain their payouts. At that time the founders of the ICO disappear with a bank full of coins.

In other cases, the founders don’t even bother to pay anyone at all. They just collect the investor’s money and then disappear with it all when they fear they will be caught.

Investopedia reported in April 2nd that a study by the Satis Group estimated that up to 80% of all ICOs are either scams or simply quickly failed after launch. In both cases, investors lost all of their investments.

When choosing an ICO to invest in, there are many factors to analyze, and many to beware of. Here are some of the “be wary” tips identified by Zoë Bernard at Business Insider US:

1. If the company appears to be run by a team of beautiful women, then be cautious.
2. If Vladimir Putin, the president of Russia is claimed to be involved, then be cautious.
3. If the ICO white paper is very vague about how the blockchain will work, or it just seems to use a lot of buzzwords that don’t really explain anything, then be cautious
4. If the ICO company website looks TOO slick and professional, then be cautious. ICOs are usually startups and don’t typically spend a lot of their money on their website.
5. If the company website seems to be run by one person, or you can’t validate the names of the people listed, then be cautious.

Now the question is, will you do your due diligence before investing in that next get-rich-quick ICO?

Read the full Business Insider article here
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Today, Business Insider reported that the Deputy Governor of the Bank of England’s Prudential Regulation Authority (PRA), Sam Woods, has given a cautious endorsement to cryptocurrencies. Woods did so by sending a letter called “Existing or planned exposure to crypto-assets” to the CEOs of British banks, insurance companies, and designated investment firms.

In this letter Woods acknowledged the potential advantages of blockchain and cryptocurrencies by writing:

“We also recognize that the underlying distributed ledger or cryptographic technologies, on which many crypto-assets rely, have significant potential to benefit the efficiency and resilience of the financial system over time.”

But he also went on to warn the CEOs that cryptocurrencies are risky and they need to take precautions by writing:

“Crypto-assets also raise concerns related to misconduct and market integrity – many appear vulnerable to fraud and manipulation, as well as money-laundering and terrorist financing risks. Entering into activity related to crypto-assets may give also rise to reputation risks… I remind you of your firm’s responsibilities … to: (i) act in a prudent manner; (ii) have effective risk strategies and risk management systems”

The PRA letter also laid out three risk management strategies that should be followed:

1. Recognize that crypto-assets are new and evolving.  The risks of these assets should be fully considered and analyzed by the highest levels of management before entering into any significant cryptocurrency activities. Part of the analysis phase should be to include consultations with the PRA.
2. The financial firms should realistically balance their expected and desired gains from cryptocurrency exposure against the potentially significant risks.  They should not take excessive risks.
3. Firms should be sure to have appropriate high-level experts in cryptocurrency technology involved in their risk assessment analysis and conduct extensive due diligence before taking on any (further) cryptocurrency exposure.

The full PRA letter can be read here

This is very significant since the Bank of England which was founded more than 300 years ago is one of the most important and stable banks in the United Kingdom. This bank is the one that prints bank notes for the U.K. as well as stores gold bullion. Their endorsement, even limited as it is, is a hugely positive development in the road to mass adoption of cryptocurrencies.

Read the full Business Insider article here
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Today, Bloomberg reported that US House of Representative members have received “guidance” which stated that they should begin to report their cryptocurrency holdings. This guidance came in the form of a memorandum from the House Ethics Committee two days ago. It applies if more then $1000 worth of currency is owned. But due to the price volatility of cryptocurrencies, these members would be wise to start reporting with their very first purchase of currency, no matter how small.

The Ethics Committee stated that

“….cryptocurrencies will be treated as an *other forms of securities*”

Their currency holdings should be reported on each member’s annual financial disclosure report. This report also includes disclosure of other financial holdings, such as investments, real estate. This applies not only to the congressional members but also to their aides and families.

The advisory letter also including warnings about having a “side-business” related to cryptocurrency. In particular, this would apply to congressmen mining for more coins. The total of all side businesses together should not exceed an annual limit of $28,050.

The annual report is called a congressman’s Financial Disclosure Statement. There is also a Periodic Transaction Report which should be updated throughout the year as an individual’s financial situation changes.

In this memorandum, it was interesting to note the ways in which various US government agencies classify cryptocurrencies. For example:

“The U.S. Commodity Futures Trading Commission (CFTC) has determined that it can regulate cryptocurrencies as commodities. The Securities and Exchange Commission (SEC) has indicated that for certain purposes, cryptocurrencies may be regulated as securities and that it is continuing to review how existing securities laws and regulations apply to them. The Internal Revenue Service (IRS) has advised that for federal tax purposes, it will treat cryptocurrencies as property.”

This applies to bitcoin, ether, litecoin, and all other altcoins.  Extensive holdings of cryptocurrency by any member could influence how they vote on future regulations of the various currencies. These votes could also trigger accusations of insider trading.

In 2019 we will start to find out if these congressmen and women have been caught up in the cryptocurrency frenzy which has taken hold worldwide.

Read the full Bloomberg article here

UPDATE: August 7th, 2018. Today Forbes followed up on this story to report that Bob Goodlatte, congressional chair of the House Judiciary Committee, reported his cryptocurrency holdings. Goodlatte holdings were valued at $80,000 at one point and he seems to be the first member of Congress to have filed a cryptocurrency holding report. Even though this filing was done in May, it is just now coming to light.

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Today, Financial Times reported that a director at the Securities and Exchange Commission, William Hinman, hinted that bitcoin and ether might be classified as “commodity” tokens, rather than as “security” tokens. An exception could also apply to other coins – especially older ones, but the jury is still out.

Although the director’s comments do not reflect that this classification is certain, it does indicate that there is a very good chance that it will come to pass in the very near future. His specific mention of bitcoin and ether, and the fact that the SEC is not currently scrutinizing either is also a strong hint at what will soon be announced.

These comments by Hinman were the first time that the SEC had ever made any regulatory related comments regarding any specific coin. In the past, all SEC statements and decisions were aimed at the industry as a whole. The director said:

“Based on my understanding of the present state of ether, the Ethereum network, and its decentralized structure, current offers and sales of ether are not securities transactions,”

This would be fantastic news for both coins since being classified as a security means that a token comes under much greater scrutiny by the SEC. A security token association means registering with the SEC and abiding by disclosure laws as well as conforming to existing investor protection requirements.

With even just these non-committal comments from the director, the prices of both bitcoin and ether jumped up.

Despite past criticism of the SEC for being overly cautious, and potentially restrictive regarding cryptos, this new position would seem to show that the SEC does not want to stifle innovation while still doing its job to protect investors.

The SEC has a basic set of flexible tests which determine if a token should be classified as a security or not. They are part of what the SEC calls the “Howey Test” (circa. 1946). If all four of the following requirements are met then there is a very good chance that the investment under consideration would be classified as a security:

1. There is an investment of money
2. There is an expectation of profits
3. The investment of money is in a common enterprise
4. Any profit comes from the efforts of a promoter or third party

Based on the above tests, most new ICOs will probably be initially classified as security tokens. 

Now the question is, will these comments and opinions be set in stone?

Read the full Financial Times article here
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By getting this approval these two exchanges will bring cryptocurrencies further into the mainstream. Cryptocurrency account holders will be able to get banking services in addition to their crypto services. Regulatory approval for various financial activities, besides just cryptocurrency, could also give more confidence to investors that the exchanges are safe places to do business and put their money. And that will bring more people into the cryptocurrency sphere. Those who might have previously feared or suspected cryptocurrencies might now have the confidence to buy. More buyers would most likely translate into an increased value of various coins.

Circle is backed by Goldman Sachs and it wants to be licensed as a federal bank as well as get SEC approval to be a regulated brokerage firm. This will allow Circle to work with tokens whether they are classified as a security or not. A federal banking license is always difficult to achieve, but if successful, then Circle will not have to worry about separate state banking regulations since federal law trumps state law in this case. A banking license would also bring in many new clients. Some of these clients may only come for the banking, but they may stay for the cryptocurrency. Circle would also no longer have to depend on other traditional banks for many services. Circle would be able to directly access the federal banking system and clear their own international transactions in fiat currency.

Coinbase, which was founded in 2012 and is one of the biggest cryptocurrency trading exchanges in the US, is attempting similar registrations and approvals. Its reasons, and a successful outcome, could be the same as for Circle.

It is thought that both companies would only invest their time and effort into these expensive and difficult approvals if they felt that the risks of regulation were realistic and decreasing. Both companies may also feel that they could actually influence future regulations to their advantage if they were working from the inside.

It is often the fear of excessive government regulations that has depressed the price of cryptocurrencies in the past – this can be seen each time a major new regulation is announced and the price of cryptocurrency often gets slammed. If this is truly the cause and effect, then, conversely, Coinbase’s and Circle’s further entry into the regulatory sphere could indicate that there is light at the end of regulator the tunnel.

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