In an interview on CNBC, Catherine Bessant of the Bank of America (BofA), said cryptocurrencies as payment system are “troubling,” as it makes it difficult to catch those who make use of the for illegal transactions. Therefore, BofA will disallow the use of its credit or debit cards for the purchase of virtual currency.
Crypto Is “Troubling” as a Payment System
Bessant :
“As a payment system, I think it’s troubling, because the foundation of the banking system is on the transparency between the sender and the receiver, and cryptocurrency is designed to be nothing of the sort. In fact [it’s] designed to be not transparent.”
While expressing her view on the cryptocurrency’s underlying technology, she said- there’s a need for the , but cryptocurrencies themselves are bad as a tool for making payments as they are not built to for transparency.
The banking system itself was based on transparency, especially with financial transactions between two parties. Cryptocurrencies, on the other hand, are meant to keep both sides of the transaction hidden. The challenge has made it extremely difficult for the police and relevant authorities to clamp down on several illicit activities which includes cryptocurrency theft by cyber attackers.
“The way we sort of quote-unquote catch bad guys is by being transparent in the financial moment of money,” she mentioned in her statement, “Cryptos is the antithesis of that.”
Cryptocurrencies Can Crush Mediators
Despite the bank’s decision to not allow it’s customers from using their debit and credit cards to purchase digital currencies, they have not held anyone back from purchasing cryptocurrencies for investment via any other means.
It’s now clear that the battle against cryptocurrencies, be it or other alternative cryptocurrencies, has taken a new level as it is considered as a mode of payment rather than asset class. It’s only not being accepted as a mode of payment as it breaks all rules to be linked to a real person.
There are certain advantages as well as disadvantages of this, but the benefit far outweighs the downside if taken into deep consideration. It should be clear that before the invention of cryptocurrencies, there have been various cases of illegal transactions. On the other hand, cryptocurrencies aimed to eliminate mediators which stood as intermediaries between two parties.
With , transactions can be made without the burdensome transaction fees imposed by mediators. Cryptocurrencies will also help to make payments globally a more straightforward process than it used to be. All the criticisms about the new technology, even by prominent people have only resulted in the crypto market growing even further.
Are cryptocurrencies threat to existing inefficient banking system? Share your views in the comments section.
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Two South Korean individuals, whose names remain anonymous, were arrested this week for running a $30 million cryptocurrency Ponzi scheme in Busan, the second largest city in behind Seoul.
Ponzi Schemes Have Become a Major Issue
Over the past nine months, the two individuals established an office in Busan without the approval of local authorities and received more than $30 million from 3,787 investors. Local police disclosed that the criminal group was able to coax investors by promising a daily gain of over $4,000 and told existing investors that they could double their profit if more investors can be recruited in the short-term.
The group also told investors that it will launch three trading platforms in South Korea, the US, and China and that they were searching for 10,000 angel investors to fund their operations. It claimed that investors who have allocated more than $1,300 to the exchanges would receive 70 percent of the revenues generated by the three non-existent exchanges.
The two individuals were sentenced to two years in prison for committing financial fraud and deceiving investors with a company that was not authorized by the government of Busan.
Previously, in an interview with Nathaniel Popper of the New York Times, South Korea’s third-biggest exchange CEO Tony Lyu stated that the finance and cryptocurrency markets of South Korea primarily move by word of mouth.
“Word just spreads really fast in Korea. Once people are invested, they want everyone else to join the party. There’s been this huge, almost a community movement around this,” .
Consequently, the vast majority of investors in the country rely on their connections and people around them to introduce assets, currencies, commodities, and stocks to invest in. The word of mouth-based market of South Korea has made local investors more prone to Ponzi schemes and financial scams.
Since early 2017, local financial authorities and investigators from the Korean Financial Intelligence Unit (KIU) have been investigating into cryptocurrency Ponzi schemes, and the country’s most influential banks including Shinhan Bank have also continued to crack down on Ponzi schemes by analyzing suspicious activities and transactions.
$150 Million Ponzi
In April 2018, South Korean authorities cracked down on a $100 million Ponzi scheme which expanded from South Korea into the Philippines. From 2015 to 2016, the Ponzi scheme generated more than $150 million in profit from 35,000 investors. It deceived investors by selling an untradeable digital asset as .
One of the group’s leaders, a 50-year old developer, was sentenced to five years in prison on April 3, by Judge Park Seong-gu.
“The defendant held an executive position within the Ponzi scheme, and the entire organization relied on the software developed by the defendant to defraud investors. As such, the nature of the crime is harmful and immoral, given that the defendant stole large sums of money from a wide range of investors,” the statement of the Judge .
Recently, the Financial Supervisory Service (FSS) of South Korea stated that it had created a task force dedicated to investigate possible scams, ponzi schemes, and suspicious activities within the cryptocurrency market to ensure investors in the public market are protected.
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The Greek police have uncovered a plot to assassinate Alexander Vinnik, the Russian citizen that has been accused of having a hand in the heist. Back in July 2017, a Japanese Cybersecurity firm, WizSec, that Vinnik was actively involved in laundering $4 billion worth of from the Mt. Gox and Bitcoinica crypto exchange hacks.
Murder Attempt on Russian National
to Russian news source Sputnik, local authorities force received insider information about a planned murder operation several months ago but felt that making the news public could hamper investigations.
“The Greek law enforcement received intelligence on plans to prepare an assassination via poisoning with the help of criminals. The head of the prison and the prosecutor of the city of Thessaloniki summoned Vinnik and informed him about the plot to poison him, and special security measures were taken in connection with that,” Sputnik’s source said.
Sputnik further noted that security had been beefed up around Vinnik and he has been ordered not to receive food or water from prison warders with which he’s not familiar. As part of security measures, he’s been barred from mingling with other inmates presently as it is feared that they could also be used in the operation.
Murder Plot Not Connected to Special Services
Sources close to the case firmly believe that Vinnik’s murder attempt isn’t connected to special forces of any nation, noting that the murder attempt is linked to the underworld as many were not happy about Vinnik’s blocked extradition to the United States.
“It all began after Vinniks’s extradition to the United States was blocked. There [are] people who are extremely interested in him not coming to Russia. The assassination was ordered by some unknown person from Russia,” the source noted.
Though sources have said simple criminals orchestrated the murder plot, that claim may not be one hundred percent correct. Notably, Vinnik wrote an “acknowledgment of guilt” in Russia, stating that “he knows about crimes committed in the sphere of ,” adding that “he is ready to give testimony in Russia and assist the investigation.”
In essence, there is a chance that Vinnik has some vital information that could lead to the arrest of some heavyweights in the cryptosphere, hence the suspected attempts to poison him, in a bid to silence him forever.
Since Vinnik’s arrest on July 26, 2017, there have been many unanswered questions concerning his involvement in the Mt.Gox hack. Amidst this backdrop, the US government and its law enforcement agencies requested the extradition of Vinnik to the States in a bid to solve the puzzles, but their efforts proved futile as the suspect’s lawyer explained that Vinnik would appeal the extradition ruling at the European Court of Human Rights.
In October 2017, BTCManager that the Russian Foreign Ministry had condemned Vinnik’s extradition to the United States. , a Russian analyst at the Foundation for the Defense of Democracies, reiterated that:
“[Vinnik’s] only bargaining chip is to turn over what he knows. And nobody knows what he could say. Was he purely a lone actor? Does he know the wider chart of people involved across these currency spaces conducting this type of behavior? Can he flip on others?” he also continued by saying:
“Everyone is worrying about the unknowns. And the murkiest questions is – the $4 billion that he was laundering – who and what were involved? If you’re taking the more conspiratorial viewpoint, you ask, are the Russians afraid of Vinnik turning that information to the U.S.?”
Too many unanswered questions indeed and the puzzles could remain unsolved for many years to come.
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