Biz Builder Mike

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

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UK Finance, Which?, City of London Police Sign Letter Asking Government to Add Online Scams to “Online Safety” Bill

UK Finance (a trade association for the UK banking and financial services sector that represents around 300 firms in the UK providing credit, banking, markets and payment-related services), Which? (an organization that reviews products and services, so that you “make the best purchase decisions” for your requirements) and City of London Police are among several other organizations that have signed a letter asking the UK government to add online or Internet scams to its latest “Online Safety” bill.

The new “Online Safety” bill will require companies  – through the threat of huge fines – to enhance Internet safety in key areas like terrorist content, child sex abuse, hate crimes, cyber-bullying and the circulation of fake or misleading news updates.

But financial fraud has not been added to the bill – which may be announced in the upcoming Queen’s Speech – leading 17 organizations (representing civil society and business) to ask the Home Secretary Priti Patel and Digital Secretary Oliver Dowden to include online scams on the list.

As stated in the letter:

“Online platforms play a pivotal role in enabling criminals to reach and defraud internet users through the hosting, promotion and targeting of fake and fraudulent content on their sites, including adverts that they make significant profits from. Yet platforms have very little legal responsibility for protecting their users, despite often being the best placed to tackle harmful content.”

The letter has now been signed by the Money and Mental Health Policy Institute, Carnegie UK Trust, PIMFA, MoneySavingExpert and Age UK, among several other organizations.

The letter also states:

“We believe that fake and fraudulent content that leads to scams must be included in scope of the proposed Online Safety Bill. This would require online platforms to identify, remove and prevent fake and fraudulent content from being hosted on their sites, putting in place incentives for platforms to work together with the telecoms, banking and finance sectors to tackle economic crime.”

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Reeling from post-hack price slump, Easyfi reveals community compensation plan

After a devastating hack, a cross-chain decentralized finance (DeFi) protocol has revealed today a temporary compensation plan for token holders and investors impacted by one of the largest exploits in DeFi history. 

In a Tweet today, EasyFi announced their “Interim Compensation Plan,” a multi-stage process that includes immediate payments, IOU tokens, and incentive programs aimed at victims of the attack.

The hack, which took place 19 April, is considered to be among the largest in DeFi history, with $6 million in stablecoins and 2.98 million EZ tokens worth upwards of $120 million lost at the time of the attack. The hacker was in a complicated position, however, as after exploiting the protocol they owned upwards of 30% of the supply of EZ tokens and there was limited liquidity with which to unload them. The token “hardforked” to EZ 2.0 a week later, rendering the attacker’s remaining tokens effectively worthless. 

In a Tweet from his personal account, EasyFi founder Ankitt Gaur confirmed that the hack was the result of a “targeted attack on the founder’s machine/metamask to access admin keys and execute the well-planned hack.” This attack vector bears similarities to a 2020 hack on the personal computer of Hugh Karp, the founder of Nexus Mutual, who lost $8 million.

An expert from hack and exploit publication Rekt noted that the theft may have been the result of lax security practices, in that a single individual was in possession of the keys to the treasury, as opposed to being secured in a wallet with precautions against this type of hack such as a multisignature scheme or timelocked transactions.

In their compensation plan blog post, EasyFi characterizes the attack as “well-planned” and “sophisticated.”

Regardless of the cause, the efforts to compensate victims is multifaceted. Per their post, 25% of lost funds will be distributed to users “immediately” in the form of stablecoins, while the remaining 75% will be distributed as “IOU” tokens. The IOU tokens will have “25% discount on spot price of EZ at the time of distribution,” and be redeemable for EZ v2 tokens on a 1-to-1 basis. Hack victims will also reportedly be the recipients of future airdrops from unspecified partners and have access to other incentivized programs still in development. 

The post also noted that the protocol has worked to attract new venture capital via an “accelerated” fundraising round following the hack — a round that is still ongoing.

The token is down 4.7% today to $11.30, and down 33.8% on the week — still reeling from both the hack, as well as from compensated investors possibly cashing in their IOUs.

Compensation methods are an increasingly hot topic as hacks and exploits continue to plague DeFi. EasyFi’s multifaceted approach mirrors that of Origin Dollar’s, while other protocols have opted for creative cross-platform treasury magic to mitigate attacks in recent months.

Reeling from post-hack price slump, Easyfi reveals community compensation plan

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Uppsala Security Conducts First Virtual Assets AML Training Program for South Korean Government Agency Compliance Officers

Uppsala Security has reportedly conducted the very first “Virtual Assets AML Training Program” for partners and government agency compliance officers.

Uppsala Security, the provider of tools for Crypto Risk Management and Cybersecurity, revealed on May 4, 2021, that it has begun its Virtual Assets AML Training Program via the Crypto Incident Response Center (CIRC).

As mentioned in the announcement:

“The Training Program was initiated as a consequence of the implementation of more exigent special law revisions in South Korea beginning with March 2021. Government agencies and Virtual Asset Service Providers (VASPs) attended the training program and already obtained certified licenses.”

Uppsala Security also noted that at the end of last month, Park Jung-sup, Senior Researcher at the Center for Virtual Asset Damage Response (CIRC), had carried out a 3-day training program for Compliance Monitoring Officers of government agencies in its Korean branch office.

The training covered the following key areas:

  • Basic understanding of blockchain-based virtual assets suspicious transactions
  • Analysis of the flow of stolen funds and the suspected wallet
  • Improvement of tracking capability and real case practice

As noted in the announcement, the courses are divided into UCCA (Associate), UCCP (Professional) and UCCE (Expert), “depending on the training’s level of depth, and upon the training’s completion, trainees can also obtain an Uppsala Certified Cryptocurrency Incident Analysis certificate and license.”

A representative of the Coin&Coin Exchange, which has signed an AML contract with Uppsala Security and also took part within the CIRC training, stated that this was a good opportunity for them to gain an understanding of why AML solutions “specializing in virtual assets are important in order to comply with the special law revision.”

The representative added:

“We are looking forward to learning how to use Uppsala Security’s complex product suite for the swift tracking of alleged cases and to write STR’s evidence for suspicious transactions in next quarter’s training.”

Patrick Kim, CEO of Uppsala Security, remarked:

“I understand that the Korea Federation of Banks recently distributed a draft of ‘Guidelines for Issuing Real-Name Accounts’ to each bank in South Korea, including information on identifying and evaluating Money Laundering risks. Considering that this is a draft related to the Risk-Based Approach (RBA) recommended by the Financial Action Task Force (FATF), exchanges should eventually conduct continuous monitoring (RBA) on virtual assets separately during the VASPs’ business registration period. This means that Crypto-AML and its monitoring training for law-abiding virtual assets exchanges is also essential. We will continue to provide the best service to customers in order for them to fulfill their obligations and comply with current regulations by preventing Money Laundering through continuous operation of education programs.”

Uppsala Security provides virtual asset AML solutions to Samsung Blockchain Wallet users in 19 different countries. It also offers these solutions to Bithumb, Coin&Coin Exchange, Danal Fintech and Hexlant

Uppsala has also helped with “the identification and arrest of a virtual assets fraud suspect through a swift cooperation with the Bithumb Exchange.” Uppsala Security is based in Singapore and maintains business offices in Seoul, South Korea and Tokyo, Japan.

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Accenture and Digital Dollar Foundation to trial United States CBDC this year

Fortune 500 company Accenture has teamed up with Digital Dollar Foundation to conduct Central Bank Digital Currency, or CBDC, trials in the United States.

Announced on Monday, May 3, the newly formed Digital Dollar Project will carry out five CBDC pilot programs over the next 12 months. The project’s objective is to generate data to inform U.S. policymakers on how to develop a domestic digital currency.

The Digital Dollar Project will launch three pilot programs in the next two months, generating data on the functional, sociological, and business benefits of a digital greenback.

Al Jazeera reports that former chair of the Commodity Futures Trading Commission and co-founder of the Digital Dollar Foundation, Christopher Giancarlo, emphasized the lack of U.S. data regarding CBDC:

“There are conferences and papers coming out every week around the world on CBDCs based on data from other countries. What there is not, is any real data and testing from the United States to inform that debate. We’re seeking to generate that real-world data.”

However, the Fed is taking a cautious approach as the guardian of the world’s reserve currency, the report added, with chairman Jerome Powell responding that it is far more important to get a digital dollar right than it is to be fast.

Giancarlo countered that Powell was correct to be cautious, but warned that the U.S. could fall further behind as China pushes ahead with its own CBDC testing and deployment.

While the U.S. Federal Reserve has been conducting research into the technology and applications for a CBDC, the United States lags behind the digital currency initiatives currently ongoing in numerous other jurisdictions.

China’s central bank and leading state banks have recently been preparing to test the digital yuan for a shopping festival on May 5.

Accenture has also worked on a number of CBDC projects in other countries, including Canada, Singapore, France, and Sweden — which has already completed the first phase of its pilot.

According to a study by the Bank for International Settlements, 80% of the world’s central banks are already researching central bank-issued digital currencies.

Accenture and Digital Dollar Foundation to trial United States CBDC this year

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Fintech Ant Group Affiliate MYbank Is Planning to Expand Operations in China to Serve More Rural SMEs

China-based MYbank, an online private commercial bank and an affiliate of the Ant Group with a special focus on working with rural areas and SMEs, has revealed that it will be doubling the number of rural counties it serves in the coming years.

MYbank and its business partners plan to provide financial services in 2,000 rural counties in China within the next four years (by 2025). This should coincide with the bank’s 10th year since its launch. The initiative will ensure that rural clients are able to access the same modern financial services that are offered in some of China’s largest cities. The initiative should also help with addressing the last-mile problem in the rural finance sector.

This latest announcement from MYbank has come along with the release of the firm’s 2020 annual report, which reveals that MYbank had been serving 70% more (year-on-year) SMEs in 2020 when compared to 2019. This rise in activity has mainly been driven by MYbank’s expansion into rural areas.

Since launching operations 6 years back, MYbank has managed to serve clients in over 750 different counties across China.

Xiaolong Jin, President of MYbank, stated:

“We have continued to record remarkable growth in customer base for five consecutive years. We expect rural finance to play a significant role in advancing financial inclusion, and will further our efforts to make rural finance more accessible with our financial institution partners.”

MYbank has reportedly kept its non-performing loan ratio at around 1.52%, which is a lot lower than the 2.99% average for Chinese SME loans (as of June of last year).

MYbank had teamed up with the All-China Federation of Industry and Commerce and the China Banking Association (in March 2020) in order to introduce a “Contactless Loans” initiative, in which 118 Chinese banking institutions had come together to provide supportive loans for small and medium-sized businesses as they tried to maintain operations.

The initiatve reportedly offered more than RMB 870 billion worth of loans to many different SMEs in sectors that were negatively impacted by the COVID-19 outbreak (including local dining and retail outlets).

During the 6 months since the campaign began, MYbank and its partner banks have waived RMB 665 million in interest payments for Chinese SMEs.

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