CipherTrace Crypto Advisory | Crypto-Fueled Campaigning

April 14, 2021

CipherTrace

FATF Virtual Asset Contact Group private sector meetings
CipherTrace and Schweitzer Labs Announce Partnership to Help PACs Take Crypto Donations
The Central Bank of Argentina Asks Banks for Cryptocurrency Records
Force DAO Attacked Resulting in the loss of $376K in Force Tokens
Man Loses Over $600K After Downloading Fraudulent Wallet from Apple’s App Store
Quick Reads: BitMEX CEO Surrenders, Japan Prepares for Travel Rule, Singapore Warns Investors Off Bitcoin
ICYMI: CipherTrace and Chainlink Are Making Sanctions Compliance Simple for DeFi

FATF Virtual Assets Contract Group Travel Rule Meeting

On April 8th, InterVASP, OpenVASP, Travel Rule Information Sharing Association (TRISA), GDF, and ACCESS addressed the Financial Action Task Force’s Virtual Assets Contract Group to provide their views on the level of progress in implementing the Travel Rule globally since June 2020, including developments in relevant standards / protocols. CipherTrace CEO Dave Jevans presented Traveler, our TRISA-compliant solution, in the segment on technological solutions, sharing how it identifies counterparty VASPs and its expected global geographical adoption.

Bitcoin Suisse, Coinbase, Coinhouse, PayPal, and Zodia provided a VASP perspective, describing how they are implementing the Travel Rule, including how they collect, transmit and store relevant information, and their main challenges.

Habuchi Takahide, FATF VACG co-chair, presented on the FATF’s draft revisions to its 2019 guidance for a risk-based approach on virtual assets and VASPs, focusing on the Travel Rule. The following day, he briefed a TRISA working group.

FATF will reconvene tomorrow, April 15th, for another meeting focusing on P2P transactions.

Read our analysis of the FATF’s draft revisions: https://ciphertrace.com/analysis-proposed-fatf-guidance-for-virtual-assets-and-vasps/

Explore CipherTrace Traveler: https://ciphertrace.com/travel-rule-compliance/

Bringing KYT to Crypto Campaign Donations

CipherTrace is partnering with Schweitzer Laboratories to offer Know Your Transaction (KYT) standards to political campaigns seeking to accept cryptocurrency contributions. Through 4US, Schweitzer Laboratories’ non-partisan blockchain-based campaign finance compliance automation utility, cryptocurrency contributions sent to a committee’s wallet are prescreened to ensure campaign finance compliance and KYT standards are met before transactions occur.

Read the press release: https://finance.yahoo.com/news/compliant-cryptocurrency-campaign-contributions-complete-130000608.html

BCRA Demands Banks Keep Record of Clients Using Cryptocurrency

According to a leaked internal memo, the Central Bank of the Argentine Republic (BCRA) has asked banks within their authority to keep a record of every user who makes a transaction in cryptocurrency. Details such as each user’s address, account number, type of account, names, and their Unique Tax Identification Code are being recorded and shared with the BRCA, who claim they need this information to “monitor the functions of payment systems.” Argentina’s crypto community has reacted with alarm, suggesting that this move could be the first step towards the central bank blocking customers with crypto accounts.

Why it matters: Argentina is one of the top-ranking Latin American countries in terms of cryptocurrency usage. Mass adoption and use are being accelerated by the country’s financial crisis, with the leading exchange opening over 600k new accounts in 2020. When paired with the BCRA’s 50% annual inflation rate, the number of Argentinian citizens using crypto is bound to keep growing. This extraordinary growth means the implementation and enforcement of more strict cryptocurrency laws will have a profound impact.

DeFi Hedge Fund Force DAO Attacked, Native Token Down Over 80% In 24 Hours

DeFi hedge fund Force DAO was the victim of an attack made by five different hackers on April 4th. The attack was uncovered by Polymath’s blockchain team lead Mudit Gupta on Twitter, who provided each attacker’s address and the amount stolen. After one attacker returned their share, Force DAO recorded a loss of $376,000 USD worth of FORCE tokens, which also saw an 80% drop following the attack.

Why it matters: Hacks are always problematic and events like this add to the ever-present skepticism cryptocurrency faces. In addition to losing over a quarter of a million dollars, hackers were able to exploit Force DAO’s smart contract code.

Be Aware of Fake Wallets and Apps on the App Store

After downloading what he thought was a legitimate Trezor app on his iPhone, Phillipe Christodoulou quickly lost his entire life savings of 16.1 bitcoin to scammers running fraudulent apps and wallets on both Apple and Google Play app stores. These apps look exactly like the authentic ones, and victims are blaming Google and Apple over the perpetration of these scams. Users who have been duped cast blame on the tech giants because they advertise a strict level of security and approval in order to get listed on their official app stores. These claims give users a sense of security and assurance that the apps are vetted and, therefore, safe.

Why it matters: As crypto continues to gain more widespread attention, crypto scams are increasingly finding their way onto mainstream platforms, applications, and devices.

Former BitMEX CEO to Face Trial

Arthur Hayes, the former BitMEX CEO charged with violating the Bank Secrecy Act for failure to institute money-laundering controls, flex from Singapore to Hawaii last week to surrender to U.S. authorities. Hayes was released on $10 million bail while awaiting trial. Two other BitMEX co-founders have likewise surrendered, while a fourth executive, Gregory Dwyer, is currently in Bermuda.

Japan Takes Steps to Adopt FATF Travel Rule

Japan’s Financial Services Agency has announced its intention to adopt FATF’s Travel Rule recommendations by April of 2022. The FSA asked that the Japanese Virtual Currency Exchange Association prepares for the regulation, saying, “From the perspective of ensuring the proper and reliable execution of the crypto asset exchange business, we will examine the accurate implementation of the travel rule in terms of technology and operation. We would like the JVCEA to establish a necessary system, so please inform the members of the association.”

Singapore Prime Minister’s Likeness Used to Shill Fake Token

The Monetary Authority of Singapore has raised the alarm after Singapore’s PM had his likeness used by a BitClout user to sell almost $10k in fake tokens. Singaporean officials warned would-be investors that the cryptocurrency market is highly volatile and risky investment.