skip to Main Content
CipherTrace is hiring! See our current job openings.

INDUSTRY UPDATES & INSIGHTS

June 15, 2020

OCC Crypto Rules Incoming | Universities Ransomed | Digital Dollar Details | Scam Profits Seized | TRISA V6

  • OCC Seeks to Create New Crypto Regs for Banks
  • 3 US Universities Hit in Coordinated Ransomware Attack
  • Digital Dollar Details Revealed by Former CFTC Chairman
  • SEC Seizes $12M from Crypto Investment Scam 
  • Travel Rule Information Sharing Architecture Version 6 Released

 

OCC Proposes New Crypto Regulations for Banks

On June 4th, the Office of the Comptroller of the Currency (OCC)–a US federal bank regulator that charters national banks—released an Advance Notice of Proposed Rulemaking (ANPR). Of particular interest to the crypto community, the ANPR seeks comments from banks on the following topics:

  • Cryptocurrencies: What types of cryptocurrency-related activities banks and their customers are currently engaged in, how customer engagement in crypto-related activity impacts the bank, and any barriers or obstacles preventing further adoption of crypto-relate activity in the banking industry.
  • Artificial Intelligence: How are AI techniques, including machine learning, used or potentially used in activities related to banking (e.g transaction monitoring, anti-money laundering)?
  • RegTech: What new or innovative tools do financial services companies use to comply with applicable regulations and supervisory expectations?

Why it matters: The notice was signed by Acting Comptroller of the Currency Brian Brooks—former chief legal officer at Coinbase. Brook’s crypto background further substantiates the OCC’s efforts on implementing new, innovative banking regulations to bridge gaps between the crypto and traditional financial ecosystems. New crypto framework created by the OCC could signal other federal regulators to follow suit.

Read the full press release and ANRP: https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-76.html

 

Hacker Group Targets 3 US Universities in Ransomware Attack

On June 4th, Cointelegraph reported that three prominent US universities were the victims of recent ransomware attacks. Michigan State, Columbia College of Chicago, and UCSF were all targeted by the same ransomware gang, which boasted online about the incursions. The hacker group says that they will release stolen data on student names, social security numbers, and financial information in less than a week if a crypto payment in bitcoin is not made.

Brett Callow, a threat analyst at malware lab Emsisoft, was one of the first to spot the issue. He told Cointelegraph that these kinds of attacks are costly and enormously disruptive. Callow said that even if the universities pay up the ransom, “that will not solve the problem as they will only have a pinky promise” that the hackers will delete the data.

Read coverage in Cointelegraph here: https://cointelegraph.com/news/ransomware-strikes-three-us-universities

 

Digital Dollar Project Educates Congress on Crypto to Secure a Positive Fintech Future

The idea of a US Central Bank Digital Currency (CBDC) has suddenly become mainstream as the coronavirus pandemic continues to devastate the economy. While former regulators and consultancy firms are spearheading the effort for serious consideration, there is a critical step that must be taken: educating our government officials about crypto.

One organization—the Digital Dollar Project—was created to formally lead the initiative of educating policy makers, organizing key stakeholders, and proposing a US CBDC strategy. On May 29, the Digital Dollar Project led by J. Christopher Giancarlo, former chairman of the Commodity Futures Trading Commission (CFTC), released a white paper outlining a pathway for introducing a US Central Bak Digital Currency (CBDC). According to the white paper, this digital dollar would be a “third format of currency” that would operate alongside existing fiat and commercial bank money—including working alongside existing account based systems—while preserving user privacy. For distribution of the digital dollar, commercial banks and money service businesses would need to exchange a portion of their reserves for digital dollars, which could then be distributed to consumers via apps or cards offered by their existing financial institution. For the unbanked, the white paper suggests P2P providers, FinTechs, or telecom providers could provide digital wallet services.

Read the White Paper: https://www.digitaldollarproject.org/exploring-a-us-cbdc

 

SEC Files Complaint Against Crypto Mining and Multilevel Marketing Scam

On June 5th, the SEC unsealed its complaint and moved to freeze the assets of a $12 million cryptocurrency mining and multilevel marketing scheme conducted under the moniker “Modern Money Team” (MMT).

MMT was operated by Daniel F. Putnam, Angel A. Rodriguez, and Jean-Paul Ramirez Rico. They offered investors “cryptocurrency trading packages” that would exploit crypto “arbitrage” opportunities at Bitfinex, according to the complaint. Two hundred investors joined Putnam’s mining scheme, and MMT collectively raised $12 million from 2,000 total investors.

The complaint alleges that the three lied to investors and misappropriated their funds. Specifically, the SEC accused Putnam of spending over $100,000 of his investors’ funds on a condominium and $33,000 buying a spa.

Why It Matters: As we reported in our Spring 2020 Cryptocurrency Crime and AML Report, in recent years, Ponzi schemes like MMT have contributed the most to cryptocurrency crimes.  Educating the general public on how to avoid Ponzi schemes and scams will be important to preventing such losses in the future.

Read the Coindesk story here: https://www.coindesk.com/sec-moves-to-freeze-assets-of-alleged-12m-crypto-investment-scam

Read CipherTrace’s Spring 2020 Cryptocurrency Crime and Anti-Money Laundering Report: https://ciphertrace.com/spring-2020-cryptocurrency-anti-money-laundering-report/

 

TRISA Releases Version 6 of the Travel Rule Information Sharing Architecture Whitepaper

The Travel Rule Information Sharing Architecture (TRISA) is an open-source framework to support VASPs in sharing sender and receiver information in compliance with AML regulations set forth by the Financial Action Task Force’s (FATF) Recommendation 16. TRISA has been collaborating with the FATF Virtual Asset Contact Group to demonstrate industry progress and address areas of concern and scope.

On June 12th, the Travel Rule Information Sharing Alliance released Version 6 of the TRISA whitepaper. Important additions were made to ease global adoption and help alleviate the “sunrise problem,” such as supporting the InterVASP messaging standard, OpenVASP, and other identifiers. V6 also includes the VASP verification questionnaire (TRIXO), enhanced processes for verifying VASPs, the certificate hierarchy, and encrypted transaction envelopes.

Why It Matters: On June 24th, the FATF Plenary Meeting will discuss virtual asset industry progress, next actions, and regulatory progress of its 37 member nations.

Enforced compliance is imminent, with some countries, such as the United States, for example, already enforcing the Travel Rule for virtual asset businesses. TRISA is emerging as a clear leader among Travel Rule solutions. In responding to the FATF’s stringent guidelines, TRISA has won support from more than forty cryptocurrency exchanges, companies, and payment networks. Unlike other solutions which address local issues, TRISA breaks these geographic constraints and enables the VASP community to bootstrap a global solution despite discrepancies in technical deployments and regulation timelines.

Learn more and read the whitepaper at https://trisa.io

Back To Top