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INDUSTRY UPDATES & INSIGHTS

February 12, 2021

It’s Raining (Digital) Yuan | Crypto Fraudster Pleads Guilty | Bank Cryptocurrency with Visa | Quick Reads of the Week

  • Chinese Cities of Beijing & Suzhou Will Airdrop Total of $6.5 Million in Digital Yuan for Next Testing Phase of CBDC
  • Australian Man Stole $90 Million Through Fraudulent Crypto Fund
  • Visa Tests APIs For Future Digital Asset Services for Banks 
  • Quick Reads:
    • The International Consortium of Investigative Journalists Gets Nobel Nod
    • MasterCard Announces Plans to Support Crypto Payments in 2021
    • Former Cred Exec Returns Millions of BTC in Bankruptcy Case 
    • Nigeria Weighs Crypto’s Role in Economy

 

Beijing and Suzhou’s Residents to Receive Digital Yuan Airdrop for Next Phase of CBDC

China is continuing to cement its lead in developing its central bank digital currency (CBDC), the digital yuan. The cities of Beijing and Suzhou announced they will be airdropping 10 million digital yuan (US$1.55 million) and 30 million digital yuan (US$5 million), respectively, to citizens as part of the next testing phase for China’s CBDC. This rollout will occur as part of a Lunar New Year initiative that includes the distribution of red envelopes containing 200 yuan (US$31) to citizens around those cities.

Recipients will have to download necessary apps in order to register for a lottery with a Chinese ID number; whoever is chosen as a winner will be given the digital yuan through one of the apps. The winners have a little over two weeks to spend the digital yuan at approved e-commerce and offline merchants.

The cities of Shenzhen and Suzhou have already executed successful digital yuan trials, with 140,000 transactions using the digital currency successfully made in Shenzhen. Beijing plans to initiate further pilot programs during the 2022 Winter Olympics.

Why it Matters:

This successful digital yuan pilot program executed by the Chinese government shows promise for the use of CBDCs more broadly. That said, many countries are concerned about what mass adoption of the digital yuan will mean for China’s economic influence on the world’s stage as well as China’s potentially enhanced ability to surveil its citizens’ financial transactions.

Read more in Bitcoin News and  BTC Manager:

https://news.bitcoin.com/beijings-1-5-million-digital-yuan-giveaway-china-airdrop-digital-currency-chinese-new-year/

https://btcmanager.com/suzhou-government-airdrop-5-million-digital-yuan-cbdc-trial/

 

Australian Man Embezzled $90 Million from US Investors through Fake Cryptocurrency Funds

An Australian citizen living in the United States recently pleaded guilty to falsely leading investors to put a total of $90 million into two of his fraudulent cryptocurrency firms. Twenty-four-year-old Stefan He Qin committed this crime over a period of three years from 2017-2020, during which time he created the fake funds known as “Virgil Sigma” and “VQR Multistrategy Fund.” Qin faces 20 years in prison.

The Department of Homeland Security special agent in charge said, “Qin orchestrated this reprehensible criminal scheme for many years, making misrepresentations and false promises that coaxed investors into pouring millions of dollars into fraudulent cryptocurrency firms, all the while stealing the hard-earned money of his investors.” The Virgil Sigma fund used an algorithm that took advantage of price differences of crypto assets across over 40 exchanges throughout the globe. Ironically, Qin spoke to the Wall Street Journal back in 2018, saying that Virgil Sigma was losing ETH due to an “enemy bot” targeting the fund.

Why it Matters:

Investment scams continue to be one of the most perpetuated cryptocurrency crimes. The best way to combat scammers like Qin is for cryptocurrency users to be able to identify high-yield investment scams and other crypto Ponzi schemes. If it sounds too good to be true, it probably is.

Read more in Cointelegraph:

https://cointelegraph.com/news/australian-pleads-guilty-to-90-million-crypto-fund-scam-in-the-u-s

 

Visa is Developing APIs for Banks to Offer Crypto Services

Major credit card company Visa revealed that they are working on application programming interfaces (APIs) to allow banks to offer digital asset services. Developments are currently in a pilot phase in concert with Visa’s digital asset bank partner Anchorage. Visa intends for the program to give customers the ability to easily buy and sell bitcoin and other digital assets.

The head of Visa’s Crypto Department, Cuy Sheffield, said that they see this program potentially expanding to other cryptocurrencies, stablecoins, and trading services. As of now, the only participating bank is First Boulevard but there is a waiting list for other banks to request to be included in trials.

Why it Matters:

The US Office of the Comptroller of the Currency (OCC) recently granted banks the ability to custody cryptocurrencies and allow cryptocurrency payments. As banks continue to expand their digital asset services, there will be a greater need for cryptocurrency custody APIs and for compliance solutions designed for banks to identify and report suspicious activities using cryptocurrencies.

Read More in Coin Desk:

https://www.coindesk.com/visa-anchorage-crypto-apis-pilot-for-banks

Learn about CipherTrace ArmadaTM, our solution to the AML-related challenges of banking crypto:

https://ciphertrace.com/virtual-currency-aml-risk-mitigation-for-banks-and-financial-institutions/

 

Quick Reads

 

The International Consortium of Investigative Journalists Nominated for Nobel

Nonprofit newsroom ICIJ has been nominated for a Nobel Prize for ground-breaking reporting on corruption and abuse of power worldwide. Among the consortium’s high-profile stories are the FinCEN Files, published in partnership with BuzzFeed and other international media partners.

https://www.icij.org/investigations/fincen-files/icij-nominated-for-nobel-peace-prize-for-combating-dark-money-flows/

 

Mastercard to Offer Cryptocurrencies as a Payment Option; BNY Mellon Forms Digital Assets Unit 

Mastercard this week announced intentions to make crypto an option at the point of sale before the year is out. By allowing selected cryptocurrencies on its payment networks, Mastercard hopes to “cut out inefficiencies, letting both consumers and merchants avoid having to convert back and forth between crypto and traditional [currencies] to make purchases.” America’s oldest bank, BNY Mellon, made a crypto-related announcement of its own: it has formed a digital assets unit to assist clients with their cryptocurrency needs.

https://www.cnn.com/2021/02/11/investing/mastercard-bitcoin-bny-mellon/index.html

 

Former Cred Inc. Executive Returns Bitcoin in Bankruptcy Case

A Delaware bankruptcy judge ruled that a former executive of Cred, a crypto platform, had to return millions of dollars worth of bitcoin. The case for the return was argued by law firm McDermott Will & Emery on the basis of a freeze order issued by a California court; our own Pamela Clegg assisted the law firm in tracking down the loot.

https://www.law.com/litigationdaily/2021/02/12/lotw-runners-up-and-shout-outs-2/?slreturn=20210112155753

https://www.linkedin.com/posts/josephbevansmwe_lotw-runners-up-and-shout-outs-litigation-activity-6766058254817628160-aY5l

 

Cryptocurrency’s Nigerian Future Unclear After Central Bank Prohibitions

The Nigerian Central Bank this week moved to prohibit financial institutions from providing services to crypto exchanges. In response, the Nigerian SEC put a hold on planned regulations for cryptocurrencies; the Senate plans to summon the governor of the central bank to appear before relevant committees to further discuss the future of cryptocurrency regulations in the country.

https://cointelegraph.com/news/nigeria-s-sec-suspends-planned-crypto-regulations-amid-central-bank-ban

 

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