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Weekly Update #36



UNODC issues report, finds casinos, []junkets and cryptocurrency to have emerged as a critical ML piece in the East and Southeast Asia: On Jan 15, The United Nations Office on Drugs and Crime (UNODC) issued a report titled: ‘Casinos, Money Laundering, Underground Banking, and Transnational Organized Crime in East and Southeast Asia: A Hidden, Accelerating Threat’. The report highlights that illegal online casinos, e-junkets, alongside illegal or underregulated cryptocurrency exchanges have proliferated in recent years and have emerged as a critical piece of the underground banking and money laundering infrastructure in East and Southeast Asia, fueling transnational organized crime in the region. “It’s clear that the gap between organized crime and enforcement authorities is widening quickly. If the region fails to address this criminal landscape the consequences will be seen in Southeast Asia and beyond as criminals look to reinvest profits and innovate operations,” stated Benedikt Hofmann, UNODC Deputy Regional Representative. “We trust the report will prove as a useful reference for deeper engagement between countries in Southeast Asia, UNODC, and international partners,” Hofmann said. “At this point, we are just scratching the surface.”

Venezuela terminates controversial Petro cryptocurrency after 5 years: On Jan 15, Venezuela reportedly ended it controversial Petro cryptocurrency. Announced in December 2017, Petro was a central bank digital currency created by Venezuela using blockchain technology, supposed to be backed by the country’s oil and mineral reserves. It was intended to supplement Venezuela’s plummeting hard bolivar currency as a means of circumventing U.S. sanctions. On August 2018, the sovereign bolivar was introduced, with the government stating it would be linked to the Petro coin.

EBA issues guidance to crypto asset service providers to effectively manage their exposure to ML/FT risks: On Jan 16, the European Banking Authority (EBA) extended its Guidelines on Money Laundering (ML) and Terrorist Financing (TF) risk factors to crypto asset service providers (CASP). The new Guidelines highlight ML/TF risk factors and mitigating measures that CASPs need to consider, representing an important step forward in the EU’s fight against financial crime. Sector specific guidance is provided on the factors that CASPs should consider when assessing ML/TF risks including transfers from/to self-hosted addresses, decentralized platforms, transfers to CASPs that are not authorized, the use of anonymity enhanced (privacy) coins, links to high-risk jurisdictions etc. By extending the scope of the ML/TF Risk Factors Guidelines, the EBA harmonizes the approach that CASPs across the EU should adopt when implementing the risk-based approach to AML/CFT as part of their business. The extended Guidelines will apply from 30 December 2024.

OKX granted VASP license by Dubai’s VARA: On Jan 16, OKX announced that is Dubai subsidiary OKX Middle East Fintech FZE was granted VASP license by the Virtual Assets Regulatory Authority (VARA) in Dubai. The license is non-operational and remains subject to fulfilment of specific conditions and qualifying for operational approval. Once operational, the VASP license will allow OKX Middle East to extend its approved suite of duly regulated virtual assets activities and to provide spot services and spot-pairs, to institutional and qualified retail customers via the OKX App and exchange.

Binance Thailand now open to all eligible users: On Jan 16, Binance announced that having secured licenses to operate as a digital exchange and broker in Thailand, Gulf Binance is launching full operations of it digital asset exchange and brokerage platform, Binance TH by Gulf Binance, to all eligible users.

Donald Trump says he will not allow the creation of a CBDC if reelected: On Jan 16, and during a campaign speech in New Hampshire, former President Donald Trump stated that “To protect Americans from government tyranny, as your President, I will never allow the creation of a central bank digital currency” if reelected. He warned that a CBDC would be a “dangerous threat to freedom” and would give the federal government “absolute control over your money”. On the flipside the Bank of International Settlements issued a paper in June 2023, suggesting that there could be 15 retail and 9 wholesale CBDCs publicly circulating in 2030.

U.S. Treasury and IRS announce that businesses do not have to report receipt of digital currencies above $10K as cash, until regulations are issued: On Jan 16, following a revision of the “Infrastructure Investment and Jobs Act” the Treasury Department and the Internal Revenue Service announced that U.S. businesses do not have to report the receipt of digital assets over $10K the same way as they must report the receipt of cash until Treasury and IRS issue regulations. However, the announcement does not affect the rules in effect before the Infrastructure Investment and Jobs Act for cash received in the course of a trade or business, which must be reported on Form 8300, Report of Cash Payments over $10,000 Received in a Trade or Business, within 15 days of receiving the cash.

Interpol releases analysis of the Metaverse’s key challenges threats and harms: On Jan 18, the Interpol released a new white paper titled: “Metaverse, a law enforcement perspective: Use cases, crime, forensics, investigation and governance”. This document provides an in-depth analysis of the Metaverse from a law enforcement perspective. The Interpol notes that the Metaverse holds opportunities for law enforcement i.e. advanced simulation and virtual crime scene preservation and immersive training. However, the document also identifies current and potential Metacrimes such as grooming:1:, radicalization:2:, cyber-physical attacks against critical infrastructure, theft of 3D virtual/cultural property, trespassing in private virtual spaces and robbery from an avatar. Some of the challenges currently faced by investigators include: the lack of standardization and interoperability; the fact that virtual worlds span across multiple jurisdictions; the added complexity of the Metaverse being accessed across multiple devices and systems. Police may be faced with virtual crime scenes where there is no physical evidence to be collected – just digital interactions involving virtual assets such as cryptocurrencies and non-fungible tokens (NFTs), which underlines the need to define what constitutes crimes and harms in the Metaverse, from a regulatory and law enforcement perspective.

Crypto news:

Frigid temps drive BTC’s hashrate down 34%: Unusually cold temperatures in Texas led to a 34% decline in the Bitcoin network hash rate between Jan. 11 and Jan. 15, with some miners reducing operations due to the strain on the state’s energy grid. Texas, hosting about 29% of the Bitcoin hash rate in the U.S., saw mining firms relocate there from China following a crackdown on BTC miners; however, some operations were curtailed to support the state’s electric grid during extreme weather conditions. Cointelegraph

TUSD loses its 1:1 parity, regains parity two days later: On Jan 18, Trust Token’s TrueUSD stablecoin (TUSD) reportedly lost its 1:1 parity with the US dollar, falling to $0.9715. At the time of this report (Jan 20), it appears to have gradually regained its parity to $0.9887. This coincided with a massive sell-off of the asset on Binance. The TUSD/USDT pair on Binance saw a total sales volume of around $435.4 million in TUSD, representing a net outflow of $66.1 million, over uncertainties regarding its reserves and an instability related to hacking incident that targeted Poloniex.

In a first of its kind, landlord and tenant sign BTC rental contract in Argentina: On Jan 15, and in a first of its kind agreement, landlord and tenant reportedly signed a BTC rental contract in Rosaria, the third most populated city in Argentina. The monthly payment under the signed contract will be equal to $100 in Bitcoin. Both the landlord and the tenant are presumed experienced crypto users, and will transfer the funds monthly via Fiwind a local crypto platform.

Trezor reports phishing breach: The hardware wallet manufacturer reported a security breach exposing contact information of around 66,000 users due to unauthorized access to a third-party support portal on Jan. 17. While no funds were compromised, users who interacted with Trezor’s support team since December 2021 may be at risk of phishing attacks, with at least 41 users receiving phishing emails and eight having their details compromised on a third-party vendor’s trial discussion platform. Trezor

ETF’s hoover up $4B in BTC after only six trading days: The recently approved Bitcoin exchange-traded funds (ETFs) now collectively hold 95,000 Bitcoin, with assets approaching $4 billion after six days of trading. Inflows into these ETFs have exceeded outflows from the Grayscale Bitcoin Trust, leading to a decrease of $2.8 billion in GBTC’s assets under management. Bloomberg analyst

Hacks and Exploits:

Socket: Socket’s Bungee bridge lost $3.3 million in an attack on addresses previously approved on the Ethereum-based SocketGateway contract. The vulnerability, resulting from a new route added to the bridging contract three days before the exploit, as funds stolen included ETH, MATIC, WBTC, WETH, and DAI, totaling approximately $3.3 million. CoinDesk

:1:Cyber grooming is when someone (often an adult) befriends a child online and builds and emotional connection with future intentions of sexual abuse, sexual exploitation of trafficking. Perpetrators often take on fake identities of a child of teen and approach their victims in child-friendly websites, leaving children vulnerable and unaware of the fact that they have been approached for purposes of cyber grooming. Source: In Virtual Reality, it is easy for cyber groomers to disguise their true identity and age using avatars. It is a new form of sexual harassment.

:2:Radicalization is defined as the action or process of making someone become more radical (=extreme) in their political or religious beliefs. Source:

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