The digital yuan, China’s central bank digital currency (CBDC), is being used as a security element in car prepurchase payment settlements. According to local media reports, a pilot test that allows customers to pay for their cars with digital yuan was established in early February in Shenzhen, and several customers are already purchasing their vehicles […]
Bitcoin News
US Senator Elizabeth Warren Comments Digital Assets Are Used to Evade Economic Sanctions
U.S. Senator Elizabeth Warren criticized the illegal use of cryptocurrency assets by bad actors. Commenting on a report issued by the U.S. Government Accountability Office (GAO), Warren declared that “rogue nations are using crypto to dodge sanctions and undermine our national security,” calling to establish increased money laundering rules on these assets.
U.S. Senator Elizabeth Warren: ‘Rogue Nations Are Using Crypto to Dodge Sanctions’
Elizabeth Warren, a U.S. senator, has commented on the role digital assets fulfill for bad actors, which use them to sidestep sanctions established by the U.S. government. In a post on X, Warren criticized the use of these tools for these purposes, calling for establishing controls that would contribute to diminishing this use.
Commenting on a U.S. Government Accountability Office (GAO) that examines the use of digital assets to evade sanctions, Warren stated:
A new U.S. GAO report confirms that rogue nations are using crypto to dodge sanctions and undermine our national security.
The report, issued in December, found that “digital assets like bitcoin and other virtual currencies pose risks to implementing and enforcing U.S. sanctions” but that the agency could mitigate some of these risks, given that “many digital assets are recorded on a public ledger, which may enable U.S. agencies and analytics firms to trace transactions and potentially identify illicit actors.”
Warren got hit by a community note on X, clarifying that the U.S. Treasury’s National Money Laundering Risk Assessment report confirmed that fiat was the preferred currency for financial crimes. Nonetheless, Warren called for “crypto to follow the same anti-money laundering rules as everyone else,” promoting her own Digital Asset Anti-Money Laundering Act, which would apply Bank Secrecy Act (BSA) rules to several elements of the crypto tech stack.
Warren also got criticized by several actors in the cryptocurrency industry. Coinbase CLO Paul Grewal blasted the referred report, stressing that it was made with “zero comparative analysis” just to “harangue an industry that spends millions and millions to follow the law.”
What do you think about Sen. Warren’s statements? Tell us in the comments section below.
Israel Police Freeze Crypto Accounts at Binance Allegedly Used by Hamas
The Israel Police have frozen crypto accounts held at Binance allegedly used by Hamas to collect crypto donations as tensions between Israel and Hamas escalate. In addition, the Israel Police have frozen a Hamas-linked account at Barclays Bank.
Hamas-Linked Crypto Accounts at Binance Frozen
The Israel Police’s official account on social media platform X announced on Tuesday that cryptocurrency accounts associated with Hamas held at Binance have been frozen. The Palestinian militant organization is currently at war with Israel. The announcement details:
The Israel Police’s Cyber Unit, in collaboration with the Ministry of Defense, the Israel Security Agency, and other national intelligence agencies, has successfully frozen cryptocurrency accounts used by Hamas for fundraising their activities.
According to a separate announcement in Hebrew as translated by Google, the Israel Police’s cyber unit, Lahav 433, has frozen cryptocurrency accounts “which were used by Hamas to collect donations on social networks.” The police explained that following the outbreak of the war, Hamas launched an online fundraising campaign, asking the public to deposit cryptocurrencies into its accounts. The announcement continues:
The officers of the Cyber Unit of the Police and the National Headquarters for Economic Warfare acted immediately to locate the accounts and freeze them, with the help of the crypto exchange Binance, in order to transfer the funds to the state treasury.
Moreover, the Israel Police stated that it has also frozen a bank account at Barclays Bank used by Hamas. “The Police Cyber Unit worked in coordination with the British police and managed to freeze an additional account at the British ‘Barclays’ bank, the details of which were published by Hamas for the purpose of depositing donation funds,” Tuesday’s announcement notes. “The Israel Police, Ministry of Defense, and other partners will continue the fight against terrorist financing and targeting the strategic financial assets of terrorist organizations.”
What do you think about the Israel Police freezing crypto accounts at Binance as tensions between Israel and Hamas escalate? Let us know in the comments section below.
Here’s How Sam Bankman-Fried Allegedly Used Customer Funds On Alameda Research
On day four of the criminal trial of former FTX CEO Sam Bankman-Fried, Gary Wang, who co-founded the now-bankrupt crypto exchange and served as its former chief technology officer (CTO), testified. During his testimony, the former FTX executive revealed details about the connection between the cryptocurrency exchange and Alameda Research.
FTX’s Sam Bankman-Fried Allegedly Gave Alameda Research ‘Special Privileges’
According to various reports, on Friday, October 6, Wang appeared again in court and testified that Alameda Research’s account on FTX was allowed to trade more funds than it had available. The former FTX CTO reportedly said that Sam Bankman-Fried authorized the integration of a “allow negative” feature, which afforded Alameda “special privileges” on FTX.
Wang reportedly revealed that the “allow negative” feature enabled Alameda to hold a negative balance more than FTX’s revenue at some point in 2020 (0 million against 0 million). According to reports, Wang claimed that he increased Alameda’s line of credit several times and up to billion under Bankman-Fried’s instructions.
When the government’s prosecutors questioned where the money came from, Wang reportedly affirmed that it came from FTX’s customers’ funds. Based on the co-founder’s testimony, Bankman-Fried claimed that the “allow negative” feature was all about FTT, a native cryptocurrency “created to act as equity in FTX.”
Wang reportedly acknowledged that the customers never authorized their funds to be used by Alameda Research. “The customers did not give us permission to use their accounts like this,” the former FTX chief technology officer allegedly said.
Did SBF Repeatedly Lie About Connections With Alameda?
During his testimony, Wang was asked whether he remembered Bankman-Fried making public statements about Alameda’s unusual connections with the FTX exchange. “Yes, he (SBF) said they (Alameda Research) were treated equally and didn’t use FTX funds,” the FTX cofounder allegedly affirmed.
Furthermore, the prosecutors showed Wang – and the court – a 2019 tweet from SBF claiming that Alameda was not using funds from FTX. Interestingly, Wang affirmed that Bankman-Fried ordered the addition of “allow negative” in the exchange’s codebase on the same day the tweet was made.
It appears that is not the only time Bankman-Fried lied about Alameda’s activities on the FTX exchange. The former FTX CTO testified that Bankman-Fried subsequently claimed on Twitter (now X) and on phone calls that customer funds were kept safe.
On Thursday, October 5, Gary Wang reportedly admitted to committing fraud-related crimes while at the FTX exchange alongside Sam Bankman-Fried, former Alameda CEO Caroline Ellison, and former engineering director Nishad Singh. With the trial expected to continue till November, it remains to be seen whether or when the other former top FTX and Alameda executives will take the stand.
Treasury Sanctions Ethereum Wallet Used by Sinaloa Cartel to Launder Fentanyl Financing
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned an Ethereum wallet used by the Sinaloa Cartel to launder money from fentanyl sales in the U.S. Mario Alberto Jimenez Castro, an accused money launderer for the cartel’s Los Chapitos faction, allegedly directed the use of cryptocurrency and wire transfers to pay cartel leaders in Mexico, according to OFAC.
U.S. Treasury Targets Sinaloa Cartel Member’s Ether Wallet in Crackdown on Fentanyl Distribution
OFAC said Tuesday it sanctioned ten individuals, including several Sinaloa Cartel affiliates and fugitives, for contributing to the international proliferation of illicit drugs. In addition to sanctioning people, OFAC designated the Ethereum wallet with the address “0x9c2” used by Jimenez Castro.
“Jimenez Castro has directed U.S.-based couriers to pick up cash in the United States and deposit it into various virtual currency wallets for payment directly to the Chapitos and for reinvestment in fentanyl production,” OFAC said.
The Sinaloa Cartel is considered one of the most powerful drug trafficking groups in Mexico and is a major supplier of fentanyl in the U.S. OFAC said the sanctions target members of Los Chapitos, a faction run by the sons of imprisoned Sinaloa leader Joaquin “El Chapo” Guzman.
OFAC said the sanctions demonstrate “the [Biden] Administration’s strengthened approach to saving lives by disrupting the trafficking of illicit fentanyl and its precursors into American communities.”
The sanctions freeze any U.S. assets held by the Ethereum wallet and prohibit Americans from conducting transactions with the wallet. OFAC said it will continue targeting foreign drug traffickers contributing to the opioid epidemic through sanctions.
What do you think about OFAC sanctioning an ethereum wallet allegedly used by Sinaloa Cartel leader? Share your thoughts and opinions about this subject in the comments section below.
Zimbabwe Central Bank Says Gold-Backed Tokens Set to Be Used for ‘Transactional Purposes’
The Zimbabwean central bank recently said it is close to rolling out gold-backed digital tokens “for transactional purposes.” According to the bank’s governor, the gold-backed digital tokens have already proven to be an effective monetary policy instrument. Central bank governor John Mangudya also said the results of a consumer survey had shown that residents had limited knowledge about an envisaged central bank digital currency (CBDC).
An ‘Effective Monetary Policy Instrument’
The Reserve Bank of Zimbabwe (RBZ) has said it is now “at an advanced stage in preparations for the rolling out of GBDT [gold-backed digital tokens] for transactional purposes.” The bank said the rollout would see the gold tokens complement the U.S. dollar “in domestic transactions as retailers will be offered a safer, more convenient, and value-preserving medium of exchange.”
In a recently released mid-term monetary policy statement, RBZ governor John Mangudya revealed that the central bank will soon kickstart awareness campaigns whose objective is to “educate the public on the use and benefits of GBDT.” Mangudya also revealed that key stakeholders such as the Confederation of Zimbabwe Industries (CZI) have pledged to configure their systems to allow for the issuance of cards denominated in the GBDT.
As previously reported by Bitcoin.com News, the RBZ launched the gold-backed tokens in May to counter local residents’ demand for U.S. dollars. However, just a few months after the launch, the central bank governor said the GBDTs have already proved to be an effective monetary policy instrument.
“The GBDTs have since proved to be an effective monetary policy instrument with strong potential to help restore normalcy to the domestic financial and capital markets within the short term,” Mangudya said.
More Than 70% Willing to Use CBDC
The governor claimed that the “divisibility nature” of the digital gold tokens means they can be accessed or acquired by people from all economic backgrounds.
Concerning the uptake of physical gold coins, the RBZ boss revealed that out of the 36,059 coins which had been sold by July 14, only 769 gold coins or approximately 2% of the total had been redeemed following the end of the 180-day vesting period. According to Mangudya, the low redemption rate means residents and businesses are indeed using the physical gold coins as an alternative store of value.
With respect to the RBZ’s central bank digital currency (CBDC), Mangudya said the results of a consumer survey had shown that residents had limited knowledge about the envisaged digital currency. However, some 71.7% of the respondents expressed their willingness to use a CBDC if the central bank introduces it, Mangudya added.
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‘Evil Crypto’ Can Be Used in Foreign Trade, Russia’s Deputy Finance Minister Says
Cryptocurrency may be bad for investors but it can be useful in international settlements, according to a top government official in Moscow. Russian authorities intend to set up a special committee that would issue permits to operators employing crypto in foreign trade transactions, he indicated.
Russia Plans to ‘Experiment’ With Cross-Border Crypto Payments Amid Sanctions
Crypto assets can be used in certain scenarios, Russia’s Deputy Finance Minister Alexey Moiseev commented during an economic forum in Moscow. Speaking at the “Banks. Transformation. Economy. 2.0” conference, he was quoted by the RIA Novosti news agency as saying:
Of course, crypto is generally evil. I believe that people who invest their savings there take a very big risk … But there may be individual situations in which crypto can be used.
Moiseev made it clear he was referring to Russian foreign trade activities, which are currently restricted by Western sanctions. He also reminded that a draft law designed to regulate this matter is still under consideration in the State Duma, the lower house of Russian parliament.
“We’ll experiment … If the bill is adopted, a certain committee will be formed, including representatives of a number of ministries, the Bank of Russia and law enforcement agencies, which will give permission to individual operators to use cryptocurrency in foreign trade transactions,” the high-ranking representative of the executive power elaborated.
Alexey Moiseev suggested that the legislative process necessary to provide the legal basis for the trials will likely be delayed until the end of the year. Government officials and lawmakers have been debating various aspects of Russia’s regulatory approach toward cryptocurrencies for quite some time.
Differences between the Russian Ministry of Finance, with its more liberal views on the issue, and the Central Bank of Russia, which maintains a rather conservative stance on crypto regulations, impeded progress for months.
Since sanctions pressure on Russia increased following its invasion of Ukraine, however, they agreed “it is impossible to do without cross-border settlements in cryptocurrency,” as Moiseev revealed in September, last year.
At the same time, most state institutions are now against legalizing transactions with decentralized cryptocurrencies like bitcoin in Russia, except for the purpose of facilitating international payments under special legal regimes that are yet to be established.
Do you think Russia will try to bypass financial restrictions by using cryptocurrencies in cross-border payments? Share your thoughts on the subject in the comments section below.
Chinese Yuan Overtakes US Dollar as Most Used Currency to Settle Cross-Border Payments in China
The Chinese yuan is now China’s most used currency for cross-border settlements. According to official data from the State Administration of Foreign Exchange, the Chinese yuan rose to be the most-used currency in March over the U.S. dollar, in a push from the Beijing government to internationalize its currency for payments.
Chinese Yuan Used to Settle Most of China’s International Payments in March
Beijing is now settling most of its international trade operations using the Chinese yuan. According to official numbers from the State Administration of Foreign Exchange, a Chinese national institution in charge of managing China’s international reserve, the payments settled using the Chinese yuan overtook those made with U.S. dollars in March, being used in 48.4% of all settlements.
The Chinese yuan was used to settle 9.9 billion in payments, a record number, rising from 4.5 billion in February. The usage of the U.S. dollar for these payments fell from 48.6% to 46.7% during the same period.
China has been increasing reliance on its currency due to recent geopolitical challenges that have been used as a rationale for the U.S. to apply sanctions to Russia, affecting also Chinese companies accused of serving as proxies for the Russian government and its institutions.
Yuan Usage Has Grown
However, internationally, the usage of the Chinese yuan for settlements is minuscule when compared to the volumes settled in U.S. dollars, even with the implementation of sanctions. During March, the usage of the Chinese Yuan in global international payments rose to 4.5%, while the U.S. dollar accounted for 83.71% of all volume settled, according to data from SWIFT, a global banking payments system.
However, this marks an increase compared to the usage numbers of December, when the Chinese renminbi only accounted for 2.15% of all global payments, according to SWIFT’s renminbi tracker. This means that the yuan’s usage has more than doubled during Q1 2023.
This, and other recent trade agreements that have led countries like Russia and Brazil to settle their bilateral payments with China using national currencies or the Chinese yuan, have alarmed some analysts regarding the possible rise of a “bipolar” economic world.
Economist Nouriel Roubini recently stated that rivals of the U.S. would probably group around the yuan to propose it as an alternative to the U.S. dollar. In the same way, billionaire investor Ray Dalio noted the importance of the U.S. dollar in international trade is fading, thanks to the sanctions that the country has imposed on other countries.
What do you think about the growth of the usage of the Chinese yuan? Tell us in the comment section below.
US Treasury Report Warns of Defi’s Threat to National Security, Authors Conclude Fiat Is Used in Illicit Finance More Than Crypto
The U.S. Treasury has released a 42-page report assessing the risks of decentralized finance (defi). The report states that specific nation-state adversaries, cybercriminals, ransomware attackers, thieves, and scammers are using defi to “transfer and launder their illicit proceeds.” The Treasury’s report warns that defi could threaten national security and calls for policymakers to increase oversight.
U.S. Treasury Report Assesses Risks Associated With Decentralized Finance
The U.S. Treasury released a report on April 6, 2023, that assesses the purported risks of defi. “The risk assessment explores how illicit actors abuse defi services and vulnerabilities unique to defi services to inform efforts to identify and address potential gaps in the United States’ AML/CFT regulatory, supervisory, and enforcement regimes,” said the national treasury and finance department. The report was written by Treasury officials, including Brian Nelson, the Treasury’s undersecretary for terrorism and financial intelligence.
“Defi services at present often do not implement AML/CFT controls or other processes to identify customers, allowing layering of proceeds to take place instantaneously and pseudonymously, using long strings of alphanumeric characters rather than names or other personally identifying information,” the report adds. It also acknowledges that some firms are providing AML/CFT controls and that onchain surveillance companies exist. However, Nelson and the report’s authors maintain that these controls and monitoring practices “do not adequately address the identified vulnerabilities on their own.”
The defi report also discusses how the Treasury intends to strengthen federal oversight and regulatory policies. The authors emphasize that “centralized virtual asset service providers (VASPs) and industry solutions can partially mitigate some of these vulnerabilities.” The Treasury Department stated that regulations that cover traditional finance should also apply to decentralized finance, and regulators must close specific gaps that cybercriminals, money launderers, and scammers currently exploit. Interestingly, despite the report’s 42-page length, the Treasury report authors conclude by stating that illicit finance “remains a minor portion of the overall virtual asset ecosystem.”
On page 36 of the report, which covers the conclusion, recommended actions, and posed questions, the researchers emphasize that most nation-state adversaries and cybercriminals do not typically use crypto assets or defi for illicit financing. “Moreover, money laundering, proliferation financing, and terrorist financing most commonly occur using fiat currency or other traditional assets rather than virtual assets,” the report’s authors conclude.
What do you think about the U.S. Treasury report that assesses the purported risks associated with defi? Share your thoughts about this subject in the comments section below.
Debunking Crypto Myths With Binance! The Myth of Crypto Being Mainly Used by Criminals
The world of cryptocurrencies and blockchain has exploded in recent years. However, a lack of understanding surrounding this technology has led to a number of false beliefs and misconceptions, causing many people to approach digital assets with unwarranted suspicion and uncertainty. To combat this, Binance has made it part of its mission to provide accessible Web3 education to everyone and work to enhance crypto comprehension.
Through these efforts, Binance aims to debunk common misconceptions and promote greater crypto literacy. Their goal is to clear up confusion and help improve the general public’s understanding of crypto. It’s crucial to have a thorough understanding of the basics and think critically, as this will help people better comprehend and, ultimately, use cryptocurrency. Time to bust some crypto myths!
Myth: Crypto Is Only Used By Criminals
The use of crypto for illegal activities has been a topic of concern since the early days of this new form of digital currency. The public’s perception of cryptocurrencies as being inherently linked to criminal activities (such as money laundering, drug trafficking, and cybercrime) can largely be traced back to the early media coverage around cryptocurrency — specifically the infamous Silk Road marketplace.
Silk Road was an online black market that operated on the dark web from 2011 to 2013, offering a platform for the anonymous buying and selling of illegal goods and services using Bitcoin. The marketplace was notorious for its involvement in drug trafficking, and the association between crypto and Silk Road’s illicit activities contributed to the negative reputation of cryptocurrencies in the mainstream media.
The perceived anonymity and decentralization of crypto have given rise to concerns that they facilitate criminal activity. Many media outlets often choose to focus on high-profile cases of crypto-related crimes, furthering the idea that digital assets are mostly used by those seeking to engage in illegal activities while avoiding detection.
Reality: Data Shows That Crypto Is Mainly Used by Ordinary People
The reality is that crypto is primarily used by ordinary people and exists as a legitimate tool for a variety of everyday transactions. Binance alone has more than 120 million registered users. As with any emerging (or existing) technology, criminals will always use it for nefarious purposes. That said, illicit activity comprised just ~0.15% of crypto transactions in 2021 — down from 0.62% in 2020 despite the industry’s exponential growth — and money laundering accounted for 0.05%.
And don’t just take Binance’s word for it. This is data from Chainalysis, an independent blockchain analysis company. Chainalysis data is often used by government agencies, including the United States Federal Bureau of Investigation (FBI), Drug Enforcement Agency (DEA), and Internal Revenue Service Criminal Investigation (IRS CI), as well as the UK’s National Crime Agency (NCA), to investigate and combat crypto-related crimes.
In the traditional fiat space, close to 0 billion to trillion is laundered every year, which is around 2-5% of the global GDP — as reported by the United Nations Office on Drugs and Crime (UNODC). Compare that to crypto, and the amount is a minuscule 0.03% of that. Criminals don’t like crypto because the fact that the transactions are publicly and permanently recorded actually enables investigators. In contrast with traditional financial investigations, the transparent nature of crypto makes it easier to identify bad actors.
Criminals Don’t Like Transparency
Blockchain is inherently transparent. All transaction data is recorded in a public ledger. Anyone at any time can examine the entire codebase. Using crypto for nefarious purposes leaves an excellent paper trail for prosecutors to lock in a conviction.
Europol and the Basel Institute on Governance have stated that crypto is key to tackling organized crime. You simply cannot move large amounts of money around without getting noticed. In fact, crypto exchanges continue to be one of the primary allies in the fight against criminal activity. For example, in 2021, Binance helped take down a cybercriminal ring laundering 0 million in ransomware attacks.
Law enforcement agencies remain the spearhead of the collective fight against crime. Acquiring the required resources, skills, and tools, as well as partnering closely with crypto companies, has been a top priority for agencies globally. In the US, the Treasury Dept has asked for more funding to track and fight crypto crime, and the DoJ and FBI have set up dedicated national cryptocurrency enforcement task forces.
In addition, the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, has issued standards for virtual assets mirroring the ones for fiat. But implementation has lagged behind: out of 200 countries committed to FATF standards, only 19 have implemented the one for virtual assets (as of March 2023).
Final Thoughts
The idea that crypto is primarily a hotbed of illicit activity is grossly overstated. In fact, the vast majority of crypto transactions and investments are legitimate and focused on real-world use cases with the potential to transform the global economy. The emergence of blockchain tech has opened up new opportunities for financial innovation, and cryptocurrencies are just one aspect of this rapidly-evolving landscape.
From decentralized finance (DeFi) to non-fungible tokens (NFTs), the potential applications of crypto and blockchain technology are vast and varied. The industry has only scratched the surface of what is possible. While there are certainly risks and challenges, it’s important to approach this exciting new tech with an open mind and a willingness to learn and adapt in order to fully realize its potential for positive impact. There should also be the appropriate guardrails in place to try and eliminate bad actors — something no financial services ecosystem is immune to.
Fact: Crypto is primarily used by ordinary people. Independent data shows that just 0.15% of crypto transactions involve illicit activity. If you’re a criminal, you’re more likely to get caught using crypto than if you use cash or the traditional finance system.
Further Reading
- The Myth That Digital Assets Don’t Have Intrinsic Value
- The Myth of Crypto Being Inherently Unsafe
- The Myth of Crypto Being Used For Tax Evasion
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