Biz Builder Mike

You can't sail Today's boat on Yesterdays wind - Michael Noel

Crooked police chief sentenced to 8 years for dark web shenanigans

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Former police chief Yuri Zaitsev was recently sentenced to eight years in prison for acting as a bounty hunter for a dark web marketplace. In December 2018, Zaitsev was working as the leader of his unit within the Main Directorate for Drugs Control of the Republic of Khakassia — a law enforcement division which is analogous to the U.S. Drug Enforcement Administration, or DEA. At that time, he initiated contact with the operator of a dark net marketplace, offering to help hunt down a man who had appropriated drugs that were entrusted to him for placement in dead drops. 

In Russia, unlike the U.S., most dark web entrepreneurs do not trust the post office for shipments. The prevailing mode of dissemination of these illegal products is instead completed through dead drops — a method of delivery by which two parties can pass items or information back and forth without ever needing to meet in person.

According to the Main Investigation Department, the cop had received the equivalent of 52,000 roubles in Bitcoin (BTC) for his services. At the time, this was equivalent to approximately, $750 or 0.2 BTC. He was found guilty on charges of bribery and the disclosure of classified information.

According to Zaitsev’s wife, his prosecution was punishment for investigating senior officials within his agency. He was subsequently fired and prosecuted. From October-November 2019, Zaitsev uploaded a number of videos to YouTube in which he allegedly exposed corruption among senior officials in his Directorate. This appears to be what led to criminal charges against him for disclosure of classified information. In November 2019, Zaitsev uploaded an appeal to president Putin on YouTube in which he pleaded his case, but to no avail.

During the unrelated Silk Road investigation, numerous law enforcement officials fell afoul to what they perceived as easy, untraceable Bitcoin. DEA Special Agent Carl Force managed to elicit 1,200 Bitcoin from Ross Ulbricht. He obtained the funds using an elaborate scheme in which he had created multiple fake personas ranging from a major South American drug trafficker to a corrupt law enforcement official. One of the tasks assigned to him by Ulbricht was hunting down and murdering a former associate who allegedly had stolen Bitcoin from him. The actual thief was another law enforcement official involved in the investigation. The murder was staged by Force, but never materialized in actuality.

The events that took place in Khakasia a few years after the Silk Road saga seem in some ways like a cheap local knockoff of an expensive HBO show. As Marx once said, history repeats itself “the first time as tragedy, the second as farce”.

Crooked police chief sentenced to 8 years for dark web shenanigans

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US Federal Banks Can Now Hold Stablecoin Reserves

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US banking regulator recently authorized federal banks in the country to hold stablecoin reserves. A Monday letter from the US Office of the Comptroller of the Currency (OCC) has signaled towards a new range of crypto related changes for national banks.

What does the letter say?

The letter reads,

“We conclude that a national bank may hold such stablecoin ‘reserves’ as a service to bank customers.”

Brian Brooks, the Acting Comptroller of the Currency, noted that banks are already making stablecoins a part of their activities. He stated,

“National banks and federal savings associations currently engage in stablecoin related activities involving billions of dollars each day.”

US Federal Banks Can Now Hold Stablecoin Reserves

The Office has been clear on the fact that only stablecoins pegged 1:1 to a fiat currency will be allowed as reserves in national banks. Stablecoin that are connected with a basket of currencies like Libra and Saga could be excluded from this list. Tether could be one example of a stablecoin pegged 1:1 to USD. It is also the largest stablecoin in the market but has been marred in controversy over the years. It has been named in crypto price manipulation scams and is currently fighting a legal battle with the New York AG over a loan given to its sister concern, crypto exchange Bitfinex, to help cover its multi-million-dollar losses.

OCC becoming more crypto friendly

Brian Brooks is the former head of the legal department at Coinbase. Since he joined OCC has its acting head in March this year, he has been working to expand the crypto capabilities of American banks. In July, the OCC stated that the federal banks can start providing custody for crypto assets. In both its orders, the OCC has maintained that crypto-focused entities can only be carried out if the banks comply with know your customer (KYC), anti-money laundering (AML), and other federal requirements as they normally would.

It also warned investors to do a proper risk assessment and liquidity, compliance checks before entering into a relationship with a crypto company.

US Federal Banks Can Now Hold Stablecoin Reserves

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Cross-Border Payments are on the “Cusp of Transformation” According to Executive from Fintech Ripple

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Marcus Treacher, the SVP of Customer Success at American Fintech Ripple, notes that the world’s cross-border payments market is highly fragmented. But he claims that international transactions are now being redefined by “the power of ISO standardization” and the innovative technology approach of RippleNet, which is a “decentralized” network of global financial institutions that are conducting transactions through Ripple’s payment networks.

Treacher reveals that cross-border payments are “on the cusp of transformation.” He claims that blockchain or distributed ledger technology (DLT) and digital assets such as XRP can potentially offer a more “frictionless” global payments solution.

He notes:

“At Ripple, our mission is to remove friction from global payments and enable money to move the same way that information does today—digitally and instantly. We work with banks and payment providers to modernize legacy systems using blockchain and digital assets to make sending money around the world easier, faster and more reliable.”

He adds that Ripple’s goal is to offer real-time connections to RippleNet to banks and payment service providers. Treacher confirms that RippleNet follows the ISO2022 standard, allowing these organizations to send and receive funds on behalf of their clients and also between each other “immediately, with finality and transparency.” He claims that funds can be transferred quickly regardless of how much money is being sent or the currencies being used.

Treacher also mentions that being able to send money quickly across borders is not the only problem we need to address. He explains that funds must go to the intended or correct accounts in the right country and “at the right time to allow payments to actually flow.”

He adds:

“This need to pre-fund accounts is called the Liquidity Problem, and is one of the causes of hold-ups with cross-border payments. … Ripple has developed … On-Demand Liquidity (ODL) which uses … XRP to enable funds to be sent to destination accounts immediately – literally on-demand, rather than days beforehand.”

He claims that XRP is quite useful for conducting faster cross-border payments. It makes the process more affordable and overall more efficient, Treacher says. He explains that XRP is meant to serve as a bridge between two different fiat currencies, which should ensure that funds are transferred and received “in a given geography’s or user’s local currency instantaneously.”

He claims RippleNet is able to reduce the settlement period on international payments from 3 business days to only 3 seconds, which makes the process “truly frictionless.”

Treacher says that the crypto-asset market has been dominated or monopolized by high-net-worth individuals and “crypto enthusiasts.” But he claims that there are now an increasing number of indicators that show that institutional investors might be entering this market. He confirms that crypto markets recently set all-time highs in futures contracts’ open interest.

He points out that 60% of insitutions responding to Fidelity’s survey said they’d consider allocating a certain percentage of their porfolio to digital assets. He claims that this is a significant number when we consider the survey was completed before the COVID-19 outbreak. While not specifically mentioning Bitcoin (BTC), which Ripple considers a major threat and competitor to its business, Treacher notes that digital assets have been performing as well, if not better, than precious metals like gold.

He argues that banks and other financial service providers that are able to bring cross-border payment methods “into the modern world and provide a truly frictionless experience that reduces the many pain points consumers are facing today will emerge as leaders in tomorrow’s global payment industry.”

It’s true that Fintech firms like TransferWise are providing reliable and cost-effective ways for individuals and businesses to transfer funds, globally. Meanwhile, Bitcoin (BTC) has emerged as an increasingly popular way to transfer digital value in a peer to peer and permissionless manner.

However, Ripple has been the subject of several major lawsuits, with many XRP holders alleging that the company has been driving down the token’s price by selling large quantities of it, so that it can fund its business operations. During the past few years, the XRP market cap had briefly overtaken Ethereum (ETH) to become the second-largest digital asset by market share, trailing on Bitcoin (BTC).

But Ethereum’s market cap has now surged past the $40 billion mark, while XRP has dropped to fourth place (behind Tether’s USDT) with a market cap of only around $11 billion. While it’s true that Ripple has entered some notable partnerships, such as with MoneyGram, it remains unclear why a token like XRP is necessary when trying to send cross-border payments.

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