With the widespread growth of blockchain and cryptocurrencies around the world, it has become one of the biggest targets of cybercriminals and hackers for the past few years. Such acts have effectively diminished the trust towards the technology and caused companies and
This fraudulent act is what the Indian authorities would like to focus on in their cybercrime lab. India launched a dedicated department that will investigate and resolve cybercrime cases against cryptocurrencies, says The Hindu.
India’s Union Home Minister, Rajnath Singh, inaugurated the cyber forensic lab and Cyber Protection Awareness and Detection Centre (CyPAD) as part of the efforts of India to step up the fight against Internet-based criminals, which will be operated by Delhi police forces.
The lab includes a particular unit focused on cryptocurrencies, after years of problems caused by scammers and hackers using the emerging technology to commit a crime and exploit people.
“We are now equipped with technology to recover data from damaged hard disks, cryptocurrency analysis, malware forensic and data can be retrieved from 33,000 kinds of mobile models available in the market,” the Hindu quotes Delhi Police Commissioner Amulya Patnaik said in an interview.
The inauguration comes as India aims to make small steps toward separating criminal activities from legitimate usage of cryptocurrency.
The police have had several complaints against scammers who use cryptocurrency in their operations, but legitimate crypto businesses have criticized the position India’s central bank has adopted as it does not help facilitate a safe environment for them.
Recently, the Cointelegraph reported that the Reserve Bank of India banned banks from serving crypto businesses since July last year. This policy has since been a challenge in the country’s highest courts.
In the other side of the world, significant crimes have been committed against crypto companies and businesses that use crypto and blockchain technology including the Mt. Gox debacle of 2014 and the theft of nearly $500 million in digital tokens from Coincheck Inc. last January.
Earlier this month, a government-commissioned study has suggested that Dehli was concerned about the potential impacts of cryptocurrency on the stability of Indian rupee. /apr
Facebook Opens A Swiss Company To Develop Own Virtual Currency, Report Suggests
There is no denying that cryptocurrency is slowly becoming the most used currency in the world. The future is bright for virtual money as people started to become a lot more dependent on the internet on almost all aspects of their daily lives. And when a technology thrives, Facebook does not falter to offer the same thing. Reports suggest that Facebook has set up a company overseas to develop its virtual currency that users can send to their friends and contacts.
The social networking giant reportedly opened up a company in Switzerland to focus on payment and blockchain technology, similar to the technology that powers bitcoins and other cryptocurrencies.
According to a Swiss publication, Handelszeitung, the Facebook cryptocurrency would be tied to the US dollar and therefore will remain stable unlike bitcoin, which started crashing since 2017.
The report also revealed that Facebook has already set up a company called Libra Networks in Geneva several weeks ago. They noted that Libra is the tech giant’s internal project name for Facebook money.
Owned by Facebook Global Holding II in Ireland, the Swiss company will focus on developing the software and hardware for crypto-related functions like payments, blockchain, analytics, big data, and identity management.
Facebook is hesitant to comment regarding their plans for the digital currency and did not confirm nor denied the reports of its existence. Nonetheless, the news is consistent with an earlier report that Facebook created a team of 50 individuals to develop their cryptocurrency and blockchain technology to be used across the network and on its WhatsApp messaging services.
That design would be geared toward avoiding a speculative frenzy like the one that caused the value of the primary cryptocurrency, bitcoin, to soar and then crash. While Facebook also did not confirm anything related to the leaked project at the time, the California-based company confirmed that they are interested in blockchain technology.
“Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology,” the company said in a statement. “This new small team is exploring many different applications.”
Blockchain technology serves as the virtual ledger for every transaction using a cryptocurrency like bitcoin, and it builds up a set of data blocks recording transactions and who made them.
Meanwhile, existing crypto companies still face a huge problem in the banking system, and Facebook may face a similar obstacle in case the reports on its own crypto money turns out to be true. Earlier reports suggest that crypto companies around the world are having trouble in opening bank accounts for their operations.
The report followed the complaint filed by Sam Bankman-Fried, Chief Executive Officer of the quantitative crypto company, Alameda Research that “the standard answer of ‘just go to your local Chase branch’ doesn’t work in crypto.” Bankman-Fried also added that it is not illegal for banks to serve crypto businesses, but “it’s a massive compliance headache that they don’t want to put the resources in to solve.’’
The report pointed out that while larger banks avoid getting into a transaction with crypto and blockchain corporations, smaller banks are getting hold of the unserved market.
Silver Bank in San Diego said in its November 2018 filing for an initial offering that cryptocurrencies companies have a total of $40 billion to deposit and larger banks are letting go of it.
Blockchain investment, trading, and advisory firm NKB group have also struggled with establishing banking relationships with a lot of major banks. According to NKB Group’s head of Brokerage Ben Sebley, “denying basic banking is madness, impedes sector growth and forces companies to get creative to solve the problem […] The banks are being overly prudent.”
The facilitation of cryptocurrency in banking has been an ongoing debate after major banking giants like JPM, and other American banks have banned the purchase of cryptocurrency using their debit and credit cards. However, supporters have argued that this ban is a step back for the banking industry.
“If they are policing digital currency transactions by de-risking the activity on the basis of protecting customers from market changes, they are going to be on the hook for market changes where their financial products are used where they did not intervene and de-risk to protect consumers,” said attorney Christine Duhaime, founder of the Digital Finance Institute.
Hacked Crypto Exchange ‘Cryptopia’ Is Selling Their Assets
The barely regulated world of cryptocurrencies has undeniably has its risks, and people are only realizing it when their crypto deals go sour or when the crypto exchange becomes bankrupt. The lesson was learned the hard way by the user of the hacked crypto exchange company Cryptopia when the company announced this week that they are selling their assets for them to recover from the significant loss they experience after their system was attacked earlier this year.
The news was announced Wednesday by the company’s assigned liquidator, professional services firm Grant Thornton New Zealand. The company confirmed the news through a post on their Twitter account as well as on its website.
The announcement follows the unexpected shutting down of Cryptopia’s website on Tuesday for being “under maintenance” without any warning to their users or the public on its social media accounts. A Redditor noticed the downtime in the company ‘s website and asked whether hackers once again targeted them.
The unfortunate incident started when Cryptopia went offline on January without any warning only to notify the public after a few weeks saying that the exchange had “suffered a security breach which resulted in significant losses.”
According to a blockchain data analytics firm, their investigation allowed them to estimate the loss caused by the cyber attack to be as much as $16 million in ether and ERC-20 tokens. While the company has restarted their trading services in March, no one is still certain of the actual damages that the cyber attacked caused the company. Until now, the company is still recovering from the aftermath of the breach and still having banking issues.
According to the liquidation firm, Grant Thornton, since the damages caused by the hacking was too “severe” and has impacted the company massively in terms of trade, and amidst the effort of its management to regain composure by reducing costs and returning the business to profitability, they have decided that liquidation is the best option for the company and all stakeholders moving forward.
David Ruscoe and Russell Moore from Grant Thornton will help Cryptopia secure its assets “for the benefit of all stakeholders,” according to today’s announcement.
“While this process and investigations take place, trading on the exchange is suspended,” Grant Thornton said, adding that the complex investigation will take “months rather than weeks.”
Understandably, Cryptopia’s customers have expressed frustration over the fact that they were still not able to withdraw from their accounts since the hacking occurred. Some of them are even calling for creditors to organize and take legal actions against Cryptopia.
As a response, Ruscoe promised that his firm would conduct an investigation and do their best to come up with the best solution for all stakeholders.
“We realize Cryptopia’s customers will want to have this matter resolved as soon as possible. We will conduct a thorough investigation, working with several different stakeholders, including management and shareholders, to find the solution that is in the best interests of customers and stakeholders.”
What happened to Cryptopia is only one of many instances that highlighted the critical sentiments against cryptocurrency. Another crypto exchange company, Quadriga CX, has been in hot water in the past few months when the company could not pay $200 million – worth of funds to their customers following the death of their Chief Executive Officer.
CEO Gerard Cotten died last December and brought with him all the digital assets of the company including passwords and encryption keys of the cold and hot storages where the funds were supposedly kept for safety. However, the investigation by the monitor appointed by the court, Ernst & Young, revealed that the company owes more money than it owns.
The report reveals that Quadriga CX only has $20 million plus in assets while it owes more than $200 million. While the company maintains that there are more assets in cold storages or offline “wallets,” EY was still not able to verify the claim except when some of the Quadriga funds were questionably transferred from one hot wallet to several addresses.
Until now, the company is still trying to figure out how to repay 115,000 of their customers, and they are currently in the brink of bankruptcy.
Meanwhile, Grant Thorton is expected to file an initial report on the case next week on the New Zealand Companies Office website.
Ernst & Young Report: Quadriga CX Owes More Than It Owns
The interesting tale involving that Canada-based crypto exchange company, Quadriga CX, continues after the government-nominated monitor Ernst and Young (EY) has published a report on the assets and liabilities of the company saying that it owes much more money than it actually has.
According to the recent report by the monitor, which was dated May 1st but only published a few days ago, there are three different sources of assets and independent entities that the Quadriga CX’s fund are connected – Quadriga Fintech Solutions Corp., Whiteside Capital Corporation and 0984750 B.C. Ltd. The three companies are each presented as its bankrupt firm, which means each of the company has its list of assets and liability, notwithstanding any form of overlap.
The data produced by EY as of April 12th shows that Quadriga Fintech Solutions had CAD 254,180 (USD 189,345) in total assets, but the firm owes a total of CAD 214,873,113 (USD 160,051,461). In Quadriga Fintech Solutions alone, the company has a total deficit of $214,618,933 CAD ($159,862,116 USD).
While some may hope that there are still two other business entities that could cover up the deficit, one is mistaken as the scenario does not go far from Quadriga Fintech Solutions. Whiteside Capital corporations has no assets at all but owed $214,618,937 CAD ($159,875,011 USD) and 0984750 B.C. Ltd had $28,649,542 CAD ($21,343,192 USD) and owed $215,697,147 CAD ($160,688,982 USD).
In total, the company has a deficit of $616,285,475 CAD ($459,082,917 USD).
According to George Kinsman, the EY employee acting as the monitor and trustee, the fact that there are numerous estates, creditors, and known assets, causes a “material discrepancy between the reported fiat and cryptocurrency obligations.” He also noted that the careless bookkeeping posed a challenge in pulling together the said numbers.
It can be remembered that Quadriga CX was previously put into the limelight when its founder and Chief Executive Officer (CEO), Gerald Cotten, died last year under mysterious circumstances leaving the company with mountains of debts from its customers. On January, Quadriga entered a civil rehabilitation process when Jennifer Robertson, the widow of Cotten, wrote in an affidavit that the company could not access the cold crypto wallets of Quadriga because Cotten brought all the digital assets with him to the grave.
Nonetheless, the Ernst and Young, through the course of its investigation was still unable to find the said cold wallets listed by Quadriga in a document submitted to them. Interestingly, 103 bitcoin was accidentally transferred from a hot wallet that was allegedly part of the original Quadriga fund.
“A complete and fulsome review of Quadriga’s financial affairs will take considerable time and effort to pursue and may not be possible or cost-effective to complete given the lack of available information, the volume of transactions processed and the number of [third-party payment processors] and cryptocurrency exchanges involved, many of whom to date, have not fully cooperated with the Monitor’s investigation,” said Kinsman as his explanation why EY was not able to locate the funds in the given cold wallet addresses.
Even so, Ernst and Young hold about $500,000 in cryptocurrency recovered from Quadriga’s hot wallets and “various other sources.” EY holds 61 bitcoin, 33 bitcoin cash, 2,661 bitcoin gold, 851 litecoin, and 960 ether. The report did not address what progress, if any, EY has made in locating the exchange’s other missing cryptos.
Whether or not the funds will be returned to the clients of Quadriga remains a question. Initially, through the assistance of Robertson, authorities were able to approximate more than 115,000 claimants; however, only 76,319 claims were validated by Miller Thomson, the court-appointed legal counsel to help the victims in litigation purposes and to recover their lost funds.
Aside from the independent users of the crypto exchange, other claimants go after the funds of Quadriga. According to Robertson, the company also owes a secured creditor CAD 300,000 (USD 223,500), and Costodian, a payment processing company for Quadriga is also claiming CAD 774,214 (USD 557,200) in unpaid processing fees, though this claim is yet to be resolved in court.
While EY is hopeful that they can also go after the assets from Cotten’s estate that he left to his widow, the “preserving parties” of the estate estimate that only CAD 12 million (about USD 9 million) is left, and even if they were able to collect all of it successfully, it would still be insufficient to cover up the deficit.
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