By ANI | Updated: 16 November 2022
India will raise major issues like lack of universal consensus on laws regarding cybercrimes; weak control mechanisms of social media platforms and their misuse by terrorist and extremist groups, the dark web and crypto-currency in the upcoming international ‘No Money For Terror’ Ministerial Conference this week, top government sources said.
Crowdfunding; anonymous, decentralised, and untraceable nature of terror financing; effective multilateral and multi-stakeholder approach in identification and mitigation of threats of emerging terror-financing mechanisms; misuse of non-profit and nongovernment organisations as front structures for financing terror activities are among other serious agendas to be raised in the two-day international conference scheduled on November 18-19.
A Ministry of Home Affairs (MHA) official, requesting anonymity, told ANI how the conference being attended by 75 countries is significant amid changing scenario when “terrorists and extremists have improvised on technologies like cryptocurrency and crowdfunding by customising them to suit their requirements”.
“The dark web brings together professional hackers and those terrorists seeking to crowdsource or transfer funds. The anonymous, decentralised, and often untraceable nature of terror financing through various means poses a serious challenge. The world still lacks a universal consensus on laws and norms regarding cybercrimes,” said the official, pointing these matters would be put before the international delegation taking part in the conference.
“An effective multilateral and multi-stakeholder approach can help in the identification and mitigation of threats of emerging terror-financing mechanisms. An effective legislative framework can help ensure the internet service providers and social media platforms work towards their monitoring, control, and correction,” said the official while explaining the points to be raised at the conference.
Recent years have witnessed a combination of cryptocurrencies, the dark web, crowdfunding, and the absence of regulatory environments supporting funding for Terrorists and Extremist groups (TEGs). They have also misused non-profit and nongovernment organisations as front structures for financing their activities.
In the conference, which will be inaugurated by Prime Minister Narendra Modi around 11 am, India will seek cooperation from all countries to address challenges in combating terrorism financing.
This is the 3rd Ministerial ‘No Money for Terror’ Conference, and India is hosting it for the first time.
This Conference aims to progress the discussions on combating terrorist financing held by the international community in the previous two Conferences in Paris (2018) and Melbourne (2019). It also intends to include discussions on technical, legal, regulatory and cooperation aspects of all facets of terrorism financing. It attempts to also set the pace for other high-level official and political deliberations, focused on countering terrorist financing.
Binance to Establish Industry Recovery Initiative to Invest in Digital Sector Companies
By Reuters | Updated: 25 November 2022
Cryptocurrency exchange Binance said on Thursday it was committing $1 billion (nearly Rs. 8,200 crore) to establishing an industry recovery initiative (IRI) to invest in companies from the digital assets sector.
The move comes at a time when the crypto market is teetering from the collapse of FTX, which is seeking Chapter 11 bankruptcy protection in the United States.
The unraveling of one of the biggest crypto exchanges in the world has also fanned worries around the industry’s continued ability to draw investments from venture capital and private equity giants.
Binance said it intends to ramp up its commitment amount to $2 billion (nearly Rs. 16,340 crore) in the near future depending on need.
“We anticipate this initiative will last about six months and will be flexible on the investment structure — token, fiat, equity, convertible instruments, debt, credit lines, etc,” the crypto exchange added in a statement.
Zhao said while speaking at a conference in Abu Dhabi last week that there was significant interest from industry players in a recovery fund his company plans to launch to help cryptocurrency projects facing a liquidity squeeze, following the collapse of rival FTX.
He said such a fund would help “reduce further cascading negative effects of FTX” without giving an exact figure for the fund.
Several crypto firms have been bracing for the fallout from the FTX collapse, with many counting their exposure in millions to the beleaguered exchange.
It was reported a few days back that Binance is also under global regulatory scrutiny following the sudden collapse of the FTX cryptocurrency exchange and its subsidiaries. While speaking to reporters, Republican Patrick McHenry, a senior House Republican, confirmed that Binance’s role in the FTX collapse is under congressional scrutiny. Binance CEO Changpeng Zhao aka CZ has, however, has come out and vehemently denied taking part in the FTX collapse, citing that his exchange is a victim of the situation.
Binance has time and again argued that the cause of FTX’s collapse was ‘financial irregularities and possible fraud’ in written comments to a UK parliamentary committee. Notably, the UK counterparts wanted to know what role Binance played in the FTX collapse.
© Thomson Reuters 2022
FTX Bankruptcy: BitGo Recovers $740 Million in Crypto Assets So Far, Court Filings Show
By Associated Press | Updated: 24 November 2022
The company tasked with locking down the assets of the failed cryptocurrency exchange FTX says it has managed to recover and secure $740 million (roughly Rs. 6,040 crore) in assets so far, a fraction of the potentially billions of dollars likely missing from the company’s coffers.
The numbers were disclosed on Wednesday in court filings by FTX, which hired the cryptocurrency custodial company BitGo hours after FTX filed for bankruptcy on November 11.
The biggest worry for many of FTX’s customers is they’ll never see their money again. FTX failed because its founder and former CEO Sam Bankman-Fried and his lieutenants used customer assets to make bets in FTX’s closely related trading firm, Alameda Research. Bankman-Fried was reportedly looking for upwards of $8 billion (roughly Rs. 65,330 crore) from new investors to repair the company’s balance sheet.
Bankman-Fried “proved that there is no such thing as a ‘safe’ conflict of interest,” BitGo CEO Mike Belshe said in an email.
The $740 million (roughly Rs. 6,040 crore) figure is from November 16. BitGo estimates that the amount of recovered and secured assets has likely risen above $1 billion (roughly Rs. 8,170 crore) since that date.
The assets recovered by BitGo are now locked in South Dakota in what is known as “cold storage,” which means they’re cryptocurrencies stored on hard drives not connected to the Internet. BitGo provides what is known as “qualified custodian” services under South Dakota law. It’s basically the crypto equivalent of financial fiduciary, offering segregated accounts and other security services to lock down digital assets.
Several crypto companies have failed this year as Bitcoin and other digital currencies have collapsed in value. FTX failed when it experienced the crypto equivalent of a bank run, and early investigations have found that FTX employees intermingled assets held for customers with assets they were investing.
“Trading, financing, and custody need to be different,” Belshe said.
The assets recovered include not only Bitcoin and Ethereum, but also a collection of minor cryptocurrencies that vary in popularity and value, such as the shiba inu coin.
California-based BitGo has a history of recovering and securing assets. The company was tasked with securing assets after the cryptocurrency exchange Mt. Gox failed in 2014. It is also the custodian for the assets held by the government of El Salvador as part of that country’s experiment in using bitcoin as legal tender.
FTX is paying Bitgo a $5 million (roughly Rs. 40 crore) retainer and $1,00,000 (roughly Rs. 81 lakh) a month for its services.
FTX Bankruptcy Hearing: Sam Bankman-Fried Ran Crypto Firm as ‘Personal Fiefdom’, Assets Missing, Attorneys Say
By Reuters | Updated: 23 November 2022
FTX was run as a “personal fiefdom” of former CEO Sam Bankman-Fried, attorneys for the collapsed crypto exchange said in its first bankruptcy hearing as they detailed ongoing challenges such as hacks and substantial missing assets.
In the highest-profile crypto blowup to date, FTX filed for protection in the United States after traders pulled $6 billion (roughly Rs. 49,072 crore) from the platform in three days and rival exchange Binance abandoned a rescue deal. The collapse has left an estimated 1 million creditors facing losses totaling billions of dollars.
An attorney for FTX said at a bankruptcy hearing on Tuesday the company now intends to sell off healthy business units, but has been the subject of cyberattacks and had “substantial” assets missing.
FTX said on Saturday it has launched a strategic review of its global assets and is preparing for the sale or reorganisation of some businesses. FTX said on Tuesday it was receiving interest from potential buyers for its assets and would conduct a process to reorganize or sell them.
The hearing was held at the US Bankruptcy Court in Wilmington, Delaware and was livestreamed to around 1,500 viewers on YouTube and Zoom.
An attorney also said the firm had been run as a “personal fiefdom” of Bankman-Fried with $300 million (roughly Rs. 6,705 crore) spent on real estate such as homes and vacation properties for senior staff. FTX, led since the bankruptcy filing by new CEO John Ray, has accused Bankman-Fried of working with Bahamian regulators to “undermine” the US bankruptcy case and shift assets overseas.
Bankman-Fried did not immediately reply to an email seeking comment.
Reuters earlier reported that Bankman-Fried’s FTX, his parents and senior executives of the failed cryptocurrency exchange bought at least 19 properties worth nearly $121 million (roughly Rs. 989 crore) in the Bahamas over the past two years, official property records show.
Attorneys also said an investigation must take place into Binance’s sale of FTX in July 2021. Binance bought a stake in FTX in 2019.
Separately a filing late on Monday by Ed Mosley of Alvarez & Marsal, a consultancy firm advising FTX, showed FTX’s cash balance of $1.24 billion (roughly Rs. 10,144 crore) as of Sunday was “substantially higher” than previously thought.
It includes around $400 million (roughly Rs. 3,272 crore) at accounts related to Alameda Research, the crypto trading firm owned by Bankman-Fried, and $172 million (roughly Rs. 1,407 crore) at FTX’s Japan arm.
Reuters has reported Bankman-Fried secretly used $10 billion (roughly Rs. 81,800 crore) in customer funds to prop up his trading business, and that at least $1 billion (roughly Rs. 8,181 crore) of those deposits had vanished.
At the hearing, FTX representatives argued that names of customers should be kept secret, as disclosing them could destabilize the crypto market and open customers up to hacks. FTX also argued its customer list is a valuable asset, and disclosing it could impair future sale efforts or allow rivals to poach its user base.
A judge said those names can remain undisclosed until a future court hearing.
FTX lawyers also described an uneasy truce with court-appointed liquidators overseeing the wind-down of FTX’s Bahamas unit, FTX Digital Markets.
The two sides reached an initial agreement to coordinate their US-based insolvency proceedings before Judge John Dorsey, avoiding the possibility of conflicting rulings from two different US bankruptcy judges. But both sides signaled they still have broader disagreements over how to coordinate the recovery and preservation of assets held by various FTX affiliates.
Bankman-Fried, FTX and the Bahamas liquidators did not immediately respond to requests for comment.
FTX’s fall from grace has sent shivers through the crypto world, driving bitcoin to its lowest level in around two years and triggering fears of contagion among other firms already reeling from the collapse in the crypto market this year.
Major US crypto lender Genesis said on Monday it was trying to avert bankruptcy, days after FTX’s collapse forced it to suspend customer redemptions.
“Our goal is to resolve the current situation consensually without the need for any bankruptcy filing,” a Genesis spokesperson said in an emailed statement to Reuters, adding it continues to have conversations with creditors.
A Bloomberg News report, citing sources, had said Genesis was struggling to raise fresh cash for its lending unit.
The Wall Street Journal reported, citing sources, that Genesis had approached Binance seeking an investment but the crypto exchange decided against it, fearing a conflict of interest. Genesis also approached private equity firm Apollo Global Management for capital assistance, the WSJ said.
Apollo did not immediately respond to a Reuters request for comment on the WSJ report, while Binance declined to comment.
Crypto exchange Gemini, which runs a crypto lending product in partnership with Genesis, tweeted on Monday it was continuing to work with the company to enable its users to redeem funds from its yield-generating “Earn” program.
Gemini said on its blog last week there was no impact on its other products and services after Genesis paused withdrawals.
Since the implosion of FTX, some crypto players are taking to decentralized exchanges known as “DEXs” where investors trade peer-to-peer on the blockchain.
Overall daily trading volumes on DEXs leapt to their highest level since May on November 10, as FTX imploded, according to data from market tracker DeFi Llama, but have since pared gains.
© Thomson Reuters 2022
Two Arrested in Estonia for Cheating Hundreds of Thousands in $575 Million Crypto Fraud Scheme
By Agence France-Presse | Updated: 22 November 2022
Two men have been arrested in Estonia on suspicion of defrauding $575 million (roughly Rs. 4,700 crore) from hundreds of thousands of people in a cryptocurrency scheme, Estonian police said on Monday. Sergei Potapenko and Ivan Turogin were arrested on Sunday in a joint operation by Estonian police and the FBI and Washington have requested the extradition of the two men, the police said in a statement.
“This is one of the largest fraud cases we’ve ever had in Estonia,” Oskar Gross, head of the police’s cybercrime bureau, was quoted as saying.
The statement said the suspects “invited people to invest in their cryptocurrency token. However, they did not develop the token as promised”.
“Fraud proceeds were allegedly laundered through real estate purchases and shell companies,” it added.
The joint operation involved more than 100 police officers, including around 15 US federal agents.
Back in August, Reuters reported that Dutch authorities arrested a 29-year-old man believed to be a developer for crypto mixing service Tornado Cash. The platform was added to the US sanctions list, after allegations that it was helping conceal billions in capital flows, including for North Korean hackers.
Tornado Cash is one of the largest crypto blenders identified as problematic by the US Treasury, as the online service makes it possible to conceal the origin or destination of digital payments, increasing their anonymity, by mixing cryptocurrencies.
The digital currency mixing service has allegedly been used to launder more than $7 billion (roughly Rs. 57,000 crore) worth of virtual currency since its creation in 2019, the Treasury had stated at the time, while announcing an enforcement action against Tornado Cash. That includes the more than $455 million (roughly Rs. 3,700 crore) stolen by the Lazarus Group, a state-sponsored hacker collective with ties to North Korea.
FTX Launches Strategic Review, Seeks Court Relief to Pay Critical Vendors
By Reuters | Updated: 19 November 2022
Collapsed crypto exchange FTX said on Saturday it has launched a strategic review of its global assets and is preparing for the sale or reorganisation of some businesses.
FTX, along with about 101 affiliated firms, also sought court relief to allow the operation of a new global cash management system and payment to its critical vendors.
The exchange and its affiliates filed for bankruptcy in Delaware on November 11 in one of the highest-profile crypto blowups, leaving an estimated 1 million customers and other investors facing total losses in the billions of dollars.
FTX in a court filing on Saturday asked for permission to pay prepetition claims of up to $9.3 million (nearly Rs. 75 crore) to its critical vendors after an interim order and up to $17.5 million (nearly Rs. 140 crore) after the entry of the final order.
The exchange said that if it fails to receive the requested court relief, it will result in “immediate and irreparable harm” to its businesses.
“Based on our review over the past week, we are pleased to learn that many regulated or licensed subsidiaries of FTX, within and outside of the United States, have solvent balance sheets, responsible management and valuable franchises,” FTX’s new Chief Executive Officer John Ray said.
The company has appointed Perella Weinberg Partners LP as its lead investment bank to help with the sale process, subject to court approval.
“I respectfully ask all of our employees, vendors, customers, regulators and government stakeholders to be patient with us as we put in place the arrangements that corporate governance failures at FTX prevented us from putting in place prior to filing our chapter 11 cases,” Ray said.
© Thomson Reuters 2022
FTX Fires Three Top Executives Including Co-Founder Gary Wang: Report
By Reuters | Updated: 19 November 2022 10:46 IST
Cryptocurrency exchange FTX, which recently filed for US bankruptcy court protection, has fired three of its top executives, including co-founder Gary Wang, the Wall Street Journal reported on Friday, citing an FTX spokeswoman.
The other fired executives were engineering director Nishad Singh and Caroline Ellison, who ran FTX’s trading arm Alameda Research, the newspaper said.
FTX did not immediately respond to a request from Reuters for comment.
The crypto exchange filed for bankruptcy protection last week and former Wall Street trader Sam Bankman-Fried resigned as chief executive after the rival exchange Binance walked away from a proposed acquisition.
The US bankruptcy proceedings involve multiple FTX group companies with more than 1,00,000, and possibly over 1 million, creditors.
According to interviews with several people close to Bankman-Fried and company communications not previously reported, the company had been secretly taking risks with customer funds to prop up a trading firm owned by Bankman-Fried, which led to the company’s collapse.
The company had come under some regulatory oversight through the dozens of licenses it picked up via its many acquisitions. But that did not protect its customers and investors, who now face losses totaling billions of dollars.
Several crypto firms have since been bracing for the fallout from the FTX collapse, with many counting their exposure in millions to the beleaguered exchange.
© Thomson Reuters 2022
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