Why Committing Fraud and Other Financial Crimes with Cryptocurrency is a Bad Idea Comments Off on Why Committing Fraud and Other Financial Crimes with Cryptocurrency is a Bad Idea 488

The headlines on cryptocurrency would lead anyone to believe that it is a medium of exchange used primarily by scammers and thieves. In the opening days of 2022, Reuters reported that cryptocurrency crime in 2021 hit an all-time high. In February 2022, New Scientist reported “Cryptocurrency crimes have got too big for the US government to ignore.” In March 2022, a Forbes headline stated succinctly that “Cryptocurrency Fuels Growth of Crime.”

However, statistics paint a different picture. According to The 2022 Crypto Crime Report released by Chainalysis in February 2022, transactions involving illicit crypto addresses represented only 0.15 percent of all cryptocurrency transactions conducted in 2021. While it may be true that hackers and scammers have taken a liking to crypto markets and exchanges, financial crimes committed with cryptocurrency are not as common as one might think.

Why crypto is not optimal for crime

Crypto is built on blockchain technology, which brings a very high level of transparency to transactions. The ledger that records the details of crypto transactions is decentralized. Rather than being kept private and secure by a centralized third party, such as a financial institution or central bank, the blockchain ledger is public. Any transaction involving crypto, legitimate or illegitimate, is open to public scrutiny. Therefore illicit transactions involving crypto are much easier to detect and trace.

In addition to being transparent, blockchain transactions are also immutable. The decentralized ledger is public and distributed, meaning that multiple copies of the blockchain are held by a variety of users on the network. Making changes to a distributed blockchain involves a series of steps that are complicated and extensive to the degree of being viewed as practically impossible. Therefore, illicit transactions involving crypto are much harder to cover up.

Crypto’s digital nature is another factor that makes it a bad choice for financial crimes. Whereas fiat money, such as US dollars, can be exchanged in physical form in a back alley or smokey bar, crypto must be exchanged on a digital platform. Detecting suspicious activity in crypto exchanges is an evolving field, but one that already promises to benefit from AI and machine learning. In general, those attempting to commit illicit transactions with crypto will be closely watched.

Why crypto is not really the ‘Wild West’ of finance

When it comes to regulatory controls, there has been virtual silence in the world of cryptocurrency. This has led to the perception that the crypto realm is a Wild West where lawlessness is the rule. On some levels, there is some truth to that.

For example, “pump and dump” or “rug pull” schemes are common scams involving crypto projects. They involve the launch of a new crypto project with a lot of fanfare that attracts a lot of investors, followed by the disappearance of the founders who take the money and leave the coins valueless. The Securities and Exchange Commission has regulations that make pump and dumps illegal in the stock world, but in the crypto world, no such regulations exist. 

Moving forward, most experts agree that regulating cryptocurrency is an important step toward legitimizing the asset. Regarding laws that cover crypto crimes, there are a wide range of criminal statutes that can be used by law enforcement to address crimes involving cryptocurrency. These include statutes related to identity theft, child exploitation, drug trafficking, money laundering, and various forms of fraud.

In February 2022, the US Justice Department announced it had arrested two suspects for alleged conspiracy to launder $4.5 billion in stolen crypto. Upon announcing the charges, Kenneth A. Polite Jr., Assistant Attorney General of the Justice Department’s Criminal Division said, “Today, federal law enforcement demonstrates once again that we can follow money through the blockchain.” In short, the case reveals that committing financial crimes with cryptocurrency is a bad idea.

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Mark Fidelman is the Founder of Smart Blocks and Fanatics Media. As a Global Marketing Executive focused on Blockchain and eCommerce organizations, Mark’s passion is to provide education and inspiration to crypto enthusiasts about innovative DeFi projects. Mark is also the host of the Cryptonized! podcast.

Fidelity to Offer Bitcoin in 401(k) Retirement Plans Comments Off on Fidelity to Offer Bitcoin in 401(k) Retirement Plans 49258

The move is the first for a major retirement plan provider and may signal more widespread adoption of the cryptocurrency. 

On April 26, Fidelity announced its intention to add a Bitcoin investment option to its 401(k) retirement plans. Employees of businesses that pursue the option will be able to allocate as much as 20% of their contributions to Bitcoin, all from the company’s main investment dashboard. According to reporting by the Washington Post, Fidelity said that at least one employer has already signed up for the option which will launch later this year.

“Fidelity’s leadership, especially CEO Abby Johnson, has been at the forefront of institutional Bitcoin and crypto integration for years and is no stranger to the space, with Fidelity’s private equity and venture capital arm being a major source of capital for crypto miners, crypto SPACs, crypto hedge funds and more,” says Eric Lamison-White, Director at STS Capital Group LLC, a cross-border advisory and investment firm. “It is completely in character for Fidelity to steadily and cautiously extend access to their working class customers as the regulatory climate becomes more productive.”

Critics suggest that the volatility of Bitcoin poses an unnecessary risk to a retirement portfolio. It’s a reasonable argument. At the time of this writing, the cryptocurrency’s price has fallen by more than 6% just today. Meanwhile, at $37,978 it’s a far cry from Bitcoin’s high of $68,000, representing more than a 40% drop since November 10th of last year. 

However, advocates of cryptocurrency’s long-term utility disagree.

“Cryptocurrency is a reliable, long-term store of value because it cannot be corrupted by central authorities,” says Lisa Carmen Wang, founder of The Bad Bitch Empire, a platform for female investors in web3. “We’ve already seen hyperinflation, bank failures, and other egregious disasters happen in the last few years, so trust in governments is at an all-time low. Crypto is inevitably volatile now because it is an early stage high-risk/high-reward investment, but for those who believe in the values of a decentralized economy, crypto is an attractive long-term investment that people should consider having in their portfolio.”

Regardless of your appetite for risk, the notion that savers will be able to easily manage contributions to Bitcoin in a respected retirement plan is meaningful.

As of last year, 63% of US adults that did not hold crypto were curious about it. Many people in the crypto-curious category don’t invest because they simply don’t know how. There’s a technological barrier to entry that can feel daunting. 

When you have major retirement plan managers like Fidelity making it easy to add Bitcoin to a portfolio through a dashboard users are already familiar with, we may see this group start investing in the asset class, moving digital currencies further along toward mainstream adoption.

How a Thief Stole More Than $1M in NFTs on Instagram Comments Off on How a Thief Stole More Than $1M in NFTs on Instagram 472

A common use case for the blockchain is reducing fraud. Shouldn’t that mean it’s impervious to hackers? Not necessarily. Here’s how a hacker was able to amass more than $1 million in stolen Bored Ape Yacht Club NFTs.

For any of us that have received a nefarious link in our emails or on social media that encourages us to input private information, we’re already familiar with the logistics of phishing. A hacker sends us a link, usually under the guise of a brand or person we recognize, and asks for personal details like usernames, passwords, or bank details that aid them in assuming our identity or assets. 

It’s precisely what happened in the case of the Bored Ape Yacht Club hack which was announced on Twitter Monday morning. 

A hacker was able to take charge of the official Bored Ape Yacht Club Instagram profile, and sent a communication to followers claiming to be offering an “airdrop,” which is a term used to describe a free token giveaway. (Note: it’s not clear at this time how the hacker was able to login to the official Instagram, in the first place.)

Users were asked to link their wallet to benefit from the airdrop, which made their mobile wallet susceptible to the hacker and resulted in the transfer of multiple NFTs, presumably including four Bored Apes and a number of other NFTs minted by the Bored Apes creators, Yuga Labs.

The hack illuminates a glaring problem in the NFT market. Namely, MetaMask, the popular wallet application, only supports NFT display on mobile which is less user-friendly than the platform’s browser extension leading to mistaken transaction approvals.

What’s the solution for NFT holders? “MetaMask with Ledger,” according to Adryenn Ashley. “NFT holders need a wallet that gives them the ease of MetaMask with the security of hardware.”

The hack is a reminder that even though the blockchain has the potential to overcome fraud, users still need to be mindful of third party applications that manage their data. 

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