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President Trump Unleashes Task Force Targeting Crypto-Fueled Fraud

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As a businessman, Donald  Trump has been curiously mum on the topic of cryptocurrencies — until now. The U.S. president has signed an executive order to activate a task force whose mission is protecting consumers against fraud in the cryptocurrency space, according to Bloomberg. It’s a sign that the U.S. government is throwing more resources at this nascent market even as any formal regulatory policy remains elusive.

Regulation is expected to be among the catalysts for a turnaround in the bitcoin price, but so far all U.S. agencies have been able to do is create peripheral groups to target scams.

At the helm of the new security unit, which was unveiled on Wednesday, is the U.S. Department of Justice. In addition, the task force is comprised of regulators from the U.S. Securities and Exchange Commission, which has its own digital currency task force, as well as officials from the Federal Trade Commission and the Consumer Financial Protection Bureau.

The Trump administration is lumping crypto-fueled fraud with that of other white collar crimes such as money laundering and Ponzi schemes, for instance, with a particular focus on protecting the elderly and veterans from these nefarious activities. It’s Trump’s stamp on an Obama-era security unit that was formed in response to the Great Recession. By signing an executive order, President Trump can control the focus and direction of the group’s activities, which now includes bitcoin.

On the Radar

It’s not as though crypto fraud isn’t already on the radar of government officials. In recent days, the U.S. DOJ announced the sentencing of a “so-called Bitcoin Maven” who was charged with running an unlicensed crypto-to-fiat transfer operation and laundering bitcoin that was obtained from narcotic-fueled transactions.

Theresa Lynn Tetley of Southern California, a former real estate investor, was sentenced to more than a year in federal prison in addition to fines and forfeiting 40 bitcoin, hundreds of thousands of dollars in cash and gold bullions, all of which she obtained illegally.

Tetley advertised on LocalBitcoins.com, which is a platform for buying and selling bitcoin locally. Meanwhile, Facebook in recent weeks eased its ban on select cryptocurrency projects and many in the cryptocurrency community are wondering if Twitter will follow in its footsteps, especially after Justin Sun, founder of the Tron Foundation, tweeted about having received a visit from Twitter at the Tron offices.

President Trump is a Wall Street guy, with the Trump Building perched prominently on 40 Wall Street, a stone’s throw from the New York Stock Exchange. He made his fortunes in real estate, which incidentally is an industry that has begun to support bitcoin for payments.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 60 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Fidelity Investments Entering Crypto as Debate Over ‘Institutionalization’ Grows  

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One of the world’s biggest asset managers is planning to launch new cryptocurrency offerings by the end of the year, the latest evidence of a broad institutional push to bring digital assets mainstream.

Fidelity to Enter Crypto

Fidelity Investments, the world’s sixth-largest asset manager, is developing a new suite of crypto- and blockchain-focused products, according to CEO Abigale Johnson.

“We’ve got a few things underway, a few things that are partially done but also kind of on the shelf because it’s not really the right time. We hope to have some things to announce by the end of the year,” Johnson told the Boston Fintech Week conference on Friday.

While details remain scant, Johnson said Fidelity’s forthcoming offerings aren’t what she expected when her firm first began researching the space.

As CCN quotes:

“What we started with was building a long list of use cases for either bitcoin, Ethereum, other cryptocurrencies, or potentially just raw blockchain technology. Most of them have been scrapped by now or at least put on the shelf. The things that actually survived were not the things I think necessarily we expected. We were trying to listen to the marketplace and anticipate what would make sense.”

As Hacked reported last October, Fidelity appears to have been one of the first major institutions to mine cryptocurrency. At the time, Johnson acknowledged that her company’s U.S.-based mining operation is “making a lot of money” but the real motivation was to learn how networks and consensus operate.

Crypto Adoption Grows but Questions Remain

With $2.5 trillion in assets under management, Fidelity is one of the biggest players in global finance and its entry into cryptocurrency will provide an instant legitimacy boost to the sector. Despite the recent market downturn, large institutions ranging from Goldman Sachs to Intercontinental Exchange have announced new crypto ventures all designed to bring digital assets to mainstream circles. Although the pace and timing of these initiatives varies, the underlying trend remains overwhelmingly in favor of greater adoption, not less.

Some analysts have warned that the institutionalization of cryptocurrencies such as bitcoin undermines the core mandate of peer-to-peer money. This view was recently conveyed by Andreas Antonopoulos, who argued that the inevitable rise of the bitcoin exchange-traded fund could do more harm than good.

“ETFs fundamentally violates the underlying principle of peer-to-peer money, where each user is not operating through a custodian but has direct control of their money because they have direct control of their keys,” Antonopoulos said.

At this stage in the game, evaluating the impact of institutional money on cryptocurrency isn’t an exact science. Several analysts have noted correlations between, say, the launch of bitcoin futures and the meteoric drop in prices, but establishing causality is less credible given the small size of the futures market relative to trading over-the-counter and on digital exchanges. It has also been relatively easy to show the positive impact of bitcoin futures on volatility. As Diar points out, bitcoin’s volatility has declined sharply since December.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 603 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Manipulation, Fraud and Abuse: New York Attorney General Issues Stern Warning Against Cryptocurrency Exchanges

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The New York State Attorney General’s office has ratcheted up its war of words against cryptocurrency exchanges, warning consumers of the myriad of risks they face in depositing money on these platforms.

Crypto Exchanges at Risk of Manipulation

In a lengthy report on the “Virtual Markets Integrity Initiative,”  New York’s Attorney General argues that online cryptocurrency exchanges are vulnerable to manipulation, fraud and other types of abuse. Consumers of these platforms therefore “face significant risks” from hackers and the exchange operators themselves, some of which have been known to exploit “deceptive and predatory practices, market manipulation, and insider abuses.

“[V]irtual asset trading platforms now in operation have not registered under state or federal securities or commodities laws,” the report says. “Nor have they implemented common standards for security, internal controls, market surveillance protocols, disclosures, or other investor and consumer protections. Accordingly, customers of virtual asset trading platforms face significant risks.”

The report, which examines ten cryptocurrency exchanges operating in the U.S. and internationally, concludes a six-month investigation that was initiated by New York Attorney General Eric T. Schneiderman. Back in April, Schneiderman sent letters to 13 exchanges requesting information on their operations and internal controls.

Several Exchanges in the Hot Seat

At least four cryptocurrency exchanges were outed by the Attorney General’s office as being most problematic and possibly operating illegally in the state of New York. Not coincidentally, these exchanges refused to participate in the Attorney General’s request for information.

The report reads:

“Customers should be aware that the platforms that refused to participate in the OAG’s Initiative (Binance, Gate.io, Huobi, and Kraken) may not disclose all order types offered to certain traders, some of which could preference those traders at the expense of others, and that the trading performance of other customers on those venues could be negatively affected as a result.”

According to Forbes, a representative from the Attorney General’s office has referred three of these exchanges – Binance, Gate.io and Kraken – to the New York State Department of Financial Services “for possibly operating unlawfully in New York.”

Kraken has been on the hot seat ever since the company’s CEO publicly denounced the Attorney General’s request for more information. In a series of tweets, CEO Jesse Powell called the request “insulting” and likened it to “abuse.”

He added: “The resource diversion for this production is massive. This is going to completely blow up our roadmap! Then I realized we made the wise decision to get the hell out of New York three years ago and that we can dodge this bullet.”

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 603 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Texas Securities Board Shuts Down Two Crypto Scams

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The state of Texas took decisive action today to shut down two cryptocurrency scams affecting residents of the great Lone Star State.

Texas sent emergency to cease and desist letters to two very different projects. While only one in the viewpoint of this analysis definitively qualifies as a scam, both companies marketed themselves in a highly misleading and deceptive manner.

The two projects in question specifically were Coins Miner, and Digitalbank respectively.

Digitalbank’s issues are somewhat more benign but still problematic. Essentially, they are being accused by Texas of selling unlicensed securities without a permit in Texas. In addition, they are accused of exaggerating the supposedly groundbreaking security of their “Photon Smart Key”(which claims to be a major step forward in security and offer peer to peer exchanges between other Photon Smart Keys using biometric data as an identifier), as well as ludicrously marketing their technology as endorsed by former President Barack Obama.

The allegations against Coins Miner are particularly egregious.

Specifically, they faked endorsements from a major crypto exchange and posted a video depicting fake facilities. They used a video recorded by a journalist out of context, and also allegedly ran a fraudulent car giveaway to those who put money into their platform.

Texas’s ability to stop this stems directly from the fact that Coins Miner allegedly spammed thousands of email accounts (including residents of Texas) in an attempt to get investments in their fake crypto mining scheme. They claimed that investors could expect to receive a minimum 240% return every twenty-four hours by investing with them.

They played up their fake affiliation with Coinbase as well, with one of the main operators of the scheme pretending to be “an official Coinbase trader”.

The scam takes on another twist if you factor in geopolitics. Basically, Coins Miner claimed to operate and be based in the United Kingdom, when in reality they were operating from Russia. Given the recent context of Russian cyber warfare in the US, it is questionable whether these were truly lone actors or were, in fact, operating on behalf of Vladimir Putin.

While this scam had just about as many red flags as humanly possible, it should serve as another warning to not get suckered into something that sounds too good to be true, because it probably is.

Although the readers of Hacked.com likely would not fall prey to such tactics, it’s sobering to think about the fact that operating these types of scams is still lucrative enough (and there are enough people who will fall for them) for bad actors to keep acting. Stay vigilant everyone.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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