By Reuters | Updated: 5 May 2023
Israel has seized around 190 crypto accounts at crypto exchange Binance since 2021, including two it said were linked to Islamic State and dozens of others it said were owned by Palestinian firms connected to the Islamist Hamas group, documents released by the country’s counter-terror authorities show.
Israel’s National Bureau for Counter Terror Financing (NBCTF) on January 12 confiscated two Binance accounts and their contents, one of the documents on the NBCTF’s website showed. The seizure was to “thwart the activity” of Islamic State and “impair its ability to further its goals,” the NBCTF said on its website.
The NBCTF document, which has not been previously reported, did not give any details on the value of the crypto seized, nor how the accounts were connected to Islamic State.
Binance, the world’s largest crypto exchange by trading volumes, did not respond to Reuters’ calls and emails seeking comment.
Israel’s defence ministry, which is responsible for the NBCTF, did not immediately respond to a Reuters request for comment.
Under Israeli law, the country’s defence minister can order the seizure and confiscation of assets that the ministry deems related to terrorism.
Regulators globally have long called for tighter controls on crypto exchanges to prevent illegal activities, from money laundering to the financing of terrorism. The seizures by Israel’s NBCTF highlight how governments are targeting crypto companies in their efforts to prevent illegal activity.
Binance, founded in 2017 by CEO Changpeng Zhao, says on its website it reviews information requests from governments and law enforcement agencies on a case-by-case basis, disclosing information as legally required.
Binance has also said it checks users for connections to terrorism and has “continued to invest tremendous resources to enhance its compliance program,” it told US senators in March in response to their requests for information on Binance’s regulatory compliance and finances.
Islamic State emerged in Syria after Iraq’s civil war. At its 2014 peak, it controlled a third of Iraq and Syria, before being beaten back. Now forced underground, Islamic State militants continue to wage insurgent attacks.
The US Treasury said in a report last year that Islamic State had received crypto donations it later converted to cash, accessing funds via crypto trading platforms. The Treasury did not specify which platforms and declined to comment for this article.
The owner of the two Islamic State-linked Binance accounts seized by Israel was a 28-year old Palestinian called Osama Abuobayda, the NBCTF document shows. Abuoyada did not respond to requests for comment via email addresses and a phone number listed in the NBCTF document.
In a series of investigations last year, Reuters reported that Binance intentionally kept weak anti-money laundering controls. Since 2017, Binance has processed over $10 billion (nearly Rs. 80 crore) in payments for criminals and companies seeking to evade US sanctions, Reuters reported. Binance disputed the articles, calling the illicit-fund calculations inaccurate and the descriptions of its compliance controls “outdated.”
Two men suspected by Germany of assisting an Islamist gunman who killed four people in Vienna in 2020 used Binance, a letter from German police to the company said. Islamic State later claimed responsibility for the attack.
Binance shared information with the police on the clients, its legal representatives said last year. Reuters could not independently establish this.
Nearly all of the 189 Binance accounts seized by Israel since December 2021 were owned by three Palestinian currency exchange firms, the NBCTF documents showed.
The three are designated by Israel as “terrorist organizations,” according to a list on the NBCTF’s website, for their alleged involvement in the transfer of funds by Hamas, which runs the Palestinian territory of Gaza.
Last month, the NBCTF said in a document it had seized crypto worth over ILS 500,000 (nearly Rs. 1.11 crore)) from over 80 Binance accounts belonging to the three Gaza-based companies, Al Mutahadun For Exchange, Dubai Company for Exchange and Al Wefaq Co. For Exchange.
The accounts were the property of “terrorist organizations” or used for a “severe terror crime,” the document said, without elaborating. Local media outlets in Israel previously reported the April seizures.
A person with direct knowledge of Al Mutahadun said it did not work “at all” with crypto or cooperate with Hamas. “We are a money exchange company. Israeli allegations are all lies and are foundless,” the person said.
Al Mutahadun was designated as a “terrorist organisation” in May 2021 by Israel, the NBCTF list shows.
Al Wefaq and Dubai Co did not respond to Reuters’ requests for comment via email and WhatsApp.
Binance did not respond to Reuters’ questions on the accounts owned by the three currency exchange companies.
Hamas does not have any connection with the money exchange companies, spokesperson Hazem Qassem said. The allegations of links to the companies were an attempt by Israel to “justify its economic war against Gaza and its people,” Qassem said.
Hamas’s armed wing said last week it would stop receiving funds in bitcoin after an increase in “hostile” activity against donors.
Binance, its CEO Zhao and its former compliance chief Samuel Lim are facing civil charges from the US Commodity Futures Trading Commission (CFTC) for “wilful evasion” of US commodities laws.
Zhao has called the charges an “incomplete recitation of the facts.”
In its complaint, the CFTC said Lim received information in 2019 on Hamas’ transactions at Binance. Lim told a colleague that “terrorists” usually send small sums of funds, as “large sums constitute money laundering,” according to the CFTC complaint.
Lim has not publicly responded to the charges. He did not respond to messages sent via Telegram seeking comment for this article.
© Thomson Reuters 2023
JPMorgan’s UK Bank Chase to Ban Crypto Transactions After Increase in Scams
By Reuters | Updated: 27 September 2023
JPMorgan’s British retail bank Chase will ban crypto transactions made by customers from October 16 due to an increase in fraud and scams, the company said on Tuesday.
“We’ve seen an increase in the number of crypto scams targeting UK consumers, so we have taken the decision to prevent the purchase of crypto assets on a Chase debit card or by transferring money to a crypto site from a Chase account,” a spokesperson for the bank said.
Chase has become the latest lender in the UK to restrict customers’ access to crypto amid long-running concerns over its use in online scams run by criminals.
JPMorgan has attracted more than 1.6 million customers to its Chase retail bank since launching the mobile app-based service in Britain two years ago, and plans to roll out the consumer bank in other international markets over time.
Chase informed customers of its planned policy change by email on Tuesday morning, the bank confirmed. Crypto media outlet Coindesk reported the move earlier on Tuesday.
In March, NatWest (NWG.L) imposed new limits on the daily and monthly amount customers can send to crypto exchanges, seeking to protect consumers from “crypto-criminals.”
Spain’s Santander said last year it would block UK customers from sending real-time payments to crypto exchanges as part of measures to protect customers from scams.
Last month, payments giant PayPal announced that it would stop allowing UK customers to buy cryptocurrencies through its platform from October as it worked to comply with new rules on crypto promotions.
Britain’s financial regulator is due to bring in tougher rules to limit how crypto is advertised to British consumers, including requiring crypto firms to carry warnings about the risk and scrapping “refer a friend” bonuses.
© Thomson Reuters 2023
Crypto Reporting Framework Discussed During G20, Decision Taken on Swift Implementation
By Press Trust of India | Updated: 9 September 2023
The G-20 leaders on Saturday decided on swift implementation of the reporting framework for crypto assets, saying a significant number of member nations want information exchange on such non-financial assets to start by 2027.
The Crypto Asset Reporting Framework (CARF) or template is being developed to make sure that such non-financial assets are not used by tax evaders to conceal their unaccounted wealth.
“We call for the swift implementation of the CryptoAsset Reporting Framework (“CARF”) and amendments to the CRS. We ask the Global Forum on Transparency and Exchange of Information for Tax Purposes to identify an appropriate and coordinated timeline to commence exchanges by relevant jurisdictions,” said the G20 Leaders’ declaration, which was adopted by consensus.
The leaders of 20 developing and developed nations have reaffirmed the commitment to continue cooperation towards a globally fair, sustainable and modern international tax system appropriate to the needs of the 21st century.
“We remain committed to the swift implementation of the two-pillar international tax package. Significant progress has been made on Pillar One including the delivery of a text of a Multilateral Convention (MLC), and work on Amount B (framework for simplified and streamlined application of the arm’s length principle to in-country baseline marketing and distribution activities) as well as the completion of the work on the development of the Subject to Tax Rule (STTR) under Pillar Two,” the declaration said.
Briefing reporters after the summit, Finance Minister Nirmala Sitharaman said the G20 countries have made substantial progress on the two-pillar solution.
“Work has happened on exchange of information on immovable property transactions between countries. There is a launch of the pilot programme of the South Asia academy for tax and financial crime investigation in collaboration with the OECD,” Sitharaman said.
Under the global tax deal, about 140 countries, including India, have agreed to an overhaul of global tax norms to ensure that multinationals pay taxes wherever they operate and at a minimum of 15 percent rate. However, some vexed issues still need to be ironed out before its implementation.
The G20 countries called on the OECD to develop an inclusive framework to swiftly resolve the few pending issues relating to the MLC (multilateral convention) with a view to preparing the MLC for signature in the second half of 2023 and completing the work on Amount B by the end of 2023.
“We welcome the steps taken by various countries to implement the Global Anti-Base Erosion (GloBE) Rules as a common approach. We recognise the need for coordinated efforts towards capacity building to implement the two-pillar international tax package effectively and, in particular, welcome a plan for additional support and technical assistance for developing countries,” the declaration said.
The G20 countries also took note of the OECD report on ‘Enhancing International Tax Transparency on Real Estate’ and the ‘Global Forum Report on Facilitating the Use of Tax-Treaty-Exchanged Information for Non-Tax Purposes’.
The OECD has suggested automatic exchange with regard to information on real estate assets among countries and the setting up of digitalised ownership registers accessible to designated relevant government agencies on a real-time basis amid concerns over investments in foreign real estate being used to “shelter undeclared assets”.
The report noted that there has been a significant increase in foreign-owned real estate assets over the past decade, and a lot of funds have been shifted from financial assets to buying foreign real assets.
The Global Forum report also called for countries to adopt a ‘whole-of-government’ approach to address the challenge of illicit financial flows through the sharing of information from tax authorities to non-tax agencies, like financial intelligence units, anti-corruption agencies, customs authorities and public prosecutors.
India had been pressing for expanding the scope of common reporting standard (CRS) at the G20 to include non-financial assets like real estate properties, under the automatic exchange of information (AEOI) among OECD countries.
IMF-FSB, Regulators Set Out Roadmap to Coordinate Global Cooperation on Crypto Asset Regulation
By Reuters | Updated: 8 September 2023
Global financial regulators and the International Monetary Fund on Thursday set out a roadmap to coordinate measures that stop crypto assets from undermining macroeconomic and financial stability. Such risks are exacerbated by noncompliance with existing laws in some instances, the G20’s risk watchdog, the Financial Stability Board, and the IMF said in a paper.
Many of the claimed benefits from crypto assets, such as cheaper and faster cross-border payments, and increased financial inclusion, have yet to materialise, it added.
“Widespread adoption of crypto-assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, exacerbate fiscal risks, divert resources available for financing the real economy, and threaten global financial stability,” the paper said.
The paper sets out timelines for members of the IMF and G20 to implement recent recommendations to regulate crypto from the Financial Stability Board and IOSCO, a global group of securities regulators.
It marks a further evolution in regulatory thinking after several years of seeing little threat from the sector, with attitudes hardening after the collapse of the crypto exchange FTX last November, which rattled markets and left investors nursing losses.
“A comprehensive policy and regulatory response for crypto-assets is necessary to address the risks of crypto-assets to macroeconomic and financial stability,” said the paper, which will be presented to G20 leaders at a summit this month in New Delhi.
The European Union has approved the world’s first comprehensive set of rules for crypto assets, but there is a patchier approach elsewhere to a borderless sector where fraud and manipulation are “prevalent”.
Other elements include governments avoiding large deficits which can lead to inflation that dents fiat currencies and encourages substitutes such as cryptoassets, the paper said.
The tax treatment of crypto assets should also be spelled out, along with how existing laws apply to the sector.
© Thomson Reuters 2023
Cathie Wood’s Ark Invest and 21Shares File for First Spot-Ether ETF in the US: Details
By Reuters | Updated: 7 September 2023
Cathie Wood’s Ark Invest and crypto investment firm 21Shares are seeking regulatory approval to set up an exchange-traded fund (ETF) that would directly hold ether, according to a filing with the US Securities and Exchange Commission (SEC) on Wednesday.
It is the first attempt to list a fund in the US that would directly invest in ether, the second-largest cryptocurrency by market capitalization.
In a boost to the crypto sector, the US District of Columbia Court of Appeals last month passed a landmark ruling that the SEC was wrong to reject an application from crypto asset manager Grayscale Investments to list an ETF that tracks the price of bitcoin.
The case has been closely watched by the cryptocurrency and asset management industries, which have been trying for years to convince the SEC to approve a spot bitcoin ETF.
Cboe Global Markets earlier this year filed a proposal with the US SEC to list and trade shares of a spot bitcoin ETF by Ark Invest and 21Shares on the Cboe BZX exchange. The SEC, however, delayed a decision on whether to approve it.
The regulator has in recent years rejected dozens of applications for spot bitcoin ETFs, citing inadequate levels of trading surveillance that could leave the underlying spot market subject to fraud and manipulation.
© Thomson Reuters 2023
Talks Underway for Global Framework on Crypto Rules, Says FM Nirmala Sitharaman
By Reuters | Updated: 6 September 2023
Discussions are underway on a global framework to regulate crypto assets, India’s finance minister said on Tuesday, adding that cryptocurrencies could not be regulated efficiently without the cooperation of all countries.
“India’s (G20) presidency has put on the table key issues related to regulating or understanding that there should be a framework for handling issues related to crypto assets,” Nirmala Sitharaman said at an event in the financial capital of Mumbai.
“Active discussions are happening.”
Back in March, the Indian government said that its money laundering laws would apply to trade in cryptocurrencies.
The exchange between virtual digital assets and fiat currencies, the exchange between one or more forms of virtual digital assets, and the transfer of digital assets will be covered under money laundering laws, the notification released at the time said.
India is yet to finalise legislation and regulations surrounding cryptocurrencies even as the country’s central bank has cautioned against their use multiple times. The Reserve Bank of India has said that cryptocurrencies should be banned as they are akin to a Ponzi scheme.
G20 president India’s push to regulate cryptocurrencies gained support from both the International Monetary Fund and the United States in February.
India had said it wanted a collective global effort to deal with problems posed by cryptocurrencies such as bitcoin, and the finance ministry had said it had held a seminar for G20 member states to discuss how to come up with a common framework.
In February, Sitharaman and US Treasury Secretary Janet Yellen had discussed strengthening multilateral development banks, global debt vulnerabilities, and crypto assets on the sidelines of the G20 finance chiefs meeting.
© Thomson Reuters 2023
SBI Introduces UPI Interoperability With eRupee CBDC for Seamless Transactions
By ANI | Updated: 4 September 2023
The State Bank of India (SBI) has announced the implementation of Unified Payments Interface (UPI) interoperability with the Digital Rupee, also called as Central Bank Digital Currency (CBDC).
With this move, SBI aims to deliver convenience and accessibility to its customers. This feature, accessible through the ‘eRupee by SBI’ application will empower users to effortlessly scan any merchant UPI QR code for transactions.
SBI was among the first few banks to participate in the RBI’s retail digital e-rupee project.
Unified Payments Interface (UPI) is India’s mobile-based fast payment system, which facilitates customers to make round-the-clock payments instantly, using a Virtual Payment Address (VPA) created by the customer. UPI payment system has become hugely popular for retail digital payments in India, and its adoption is increasing at a rapid pace.
“The seamless integration of CBDC with UPI marks a significant leap for the bank, enhancing the acceptance and utilization of digital currencies in everyday transactions,” said SBI in a release. “Bank feels that this integration will be a game changer for the digital currency ecosystem.”
“By bridging the gap between CBDC and the extensively used UPI platform, SBI aims to revolutionize payments made in India. With this move in the realm of digital payments, the future of CBDC integration appears promising,” it added.
The digital rupee, also called as Central Bank Digital Currency (CBDC), was launched by the Reserve Bank of India on a pilot basis on December 1, 2022. In the Union Budget 2022-23, Finance Minister Nirmala Sitharaman announced about rolling out of the digital currency called Central Bank Digital Currency (CBDC).
CBDCs are an electronic form of a sovereign currency. As is the case with cash, it will not earn any interest but can be converted to other forms of money, like deposits with banks.
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