It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Fintrac imposes $6 million fine on cryptocurrency exchange Binance Holdings
The Canadian Press
The Binance app icon is seen on a smartphone, Feb. 28, 2023, in Marple Township, Pa. (AP Photo/Matt Slocum, File)
The federal anti-money laundering agency has issued a $6-million fine to cryptocurrency exchange company Binance Holdings Ltd.
Fintrac says Binance failed to register with the agency as a foreign money services business.
It also says the company failed to report large virtual currency transactions of $10,000 or more in the course of a single transaction, together with the prescribed information.
Fintrac chief executive Sarah Paquet says the agency will continue to work with businesses to help them understand and comply with their obligations.
Binance announced last year that it would withdraw from the Canadian market, citing regulatory concerns.
In November, the company agreed to pay a roughly US$4-billion settlement in the U.S. after breaking U.S. anti-money laundering and sanction laws.
This report by The Canadian Press was first published May 9, 2024.
Thursday, May 09, 2024
CANADIAN CRIMINAL CRYPTO CAPITALI$T
Crypto tycoon is Canada's richest person, but U.S. prison stay awaits
Changpeng Zhao is Canada’s richest person, but the crypto tycoon is about to spend four months inside a U.S. prison.
Author of the article:Postmedia News Published May 08, 2024 •
Former Binance CEO Changpeng "CZ" Zhao arrives at U.S. federal court in Seattle on April 30, 2024. PHOTO BY JASON REDMOND / AFP /Getty Images
The 47-year-old Chinese-born businessman, founder of the world’s largest cryptocurrency-exchange Binance, ranks 30th in the world with a net worth of $40.5 billion as of Tuesday, according to the Bloomberg Billionaires Index.
Zhao’s family immigrated to Vancouver in the late 1980s when he was 12 after his father, a university instructor in China, was hired by the University of British Columbia
By 16, Zhao was learning how to code and eventually attended McGill University in Montreal where he majored in computer science.
After graduation, Zhao — also known as CZ — moved to Shanghai in 2005 and founded a technology startup company that automated high-frequency trading platforms and systems for stockbrokers.
In 2013, he learned about Bitcoin and was so enamoured by its potential that he invested all of his money in the cryptocurrency.
Four years later, Zhao launched Binance and his wealth exploded. He was named one of the richest people in cryptocurrency a year later by Forbes.
However, in March 2023, a federal lawsuit was filed by the U.S. Commodity Futures Trading Commission against Binance and Zhao, which accused the company and founder of breaking rules intended to thwart money laundering operations after alleging transactions by Palestinian militant group Hamas and other suspected criminals were using the crypto exchange
Fallen Crypto Mogul Sam Bankman-Fried Sentenced To 25 Years In Prison
FTX founder Sam Bankman-Fried was sentenced Thursday to 25 years in prison for a cryptocurrency fraud that a prosecutor has described as one of the biggest financial frauds in U.S. history. His parents left the courthouse without comment.
Three months later, Zhao and Binance were also sued by the U.S. Securities and Exchange Commission, accused of 13 violations of securities rules.
Zhao resigned as Binance CEO after pleading guilty last November to one count of failing to maintain an anti-money-laundering program. He was sentenced in April to four months in prison.
Binance agreed to pay $4.3 billion to settle related allegations from the U.S. government.
“I failed here,” Zhao told a Seattle court Tuesday. “I deeply regret my failure, and I am sorry.”
Zhao also agreed to a fine of $50 million while avoiding what a U.S. Justice Department’s request for three years behind bars upon conviction.
In a letter to the court, Zhao wrote that there was “no excuse for my failure to establish the necessary compliance controls at Binance.”
“I wish I could change that part of Binance’s story,” he added. “But under my direction, Binance has now implemented the most stringent anti-money laundering controls of any non-U.S. exchange, and those controls have been in place since 2022.”
— with files from the Associated Press.
Thursday, May 02, 2024
UN: Hundreds of thousands of people forced to scam
Cambodia and Myanmar are the epicenters of a new human trafficking scourge in Southeast Asia, report says.
By Alex Willemyns for RFA 2023.08.29
Barbed wire rings a shuttered Great Wall Park compound in Sihanoukville, Cambodia, where authorities said they found evidence of human trafficking, kidnapping and torture, Sept. 21, 2022.
Cindy Liu/Reuters
Hundreds of thousands of people across Southeast Asia have been enslaved and forced to carry out online scams worth billions of dollars, a new U.N. report says, with Cambodia and wartorn Myanmar the worst affected and Thailand serving as a major trafficking hub.
The report from the U.N. human rights office notes the latest scourge of human trafficking to hit Southeast Asia is markedly different from the type that historically impacted the region: outflows of uneducated and poor citizens for forced sex work and manual labor elsewhere.
Instead, the new multi-billion dollar trafficking industry that emerged during the COVID-19 pandemic has been marked by inflows of foreign citizens – some even with higher educations – for scamming.
The report says “many of the victims are well-educated, sometimes coming from professional jobs or with graduate or even postgraduate degrees, computer-literate and multi-lingual” and are being recruited by traffickers “under the pretence of offering them real jobs.”
Many come from other Southeast Asian countries, but there are also many victims from China, South Asia, East Africa and the Middle East, it says. They often arrive in one country, such as Thailand, expecting to work there, but are then surreptitiously ferried into a second country, such as Myanmar or Cambodia, where their passports are taken.
There, the U.N. says, they are kept under the watch of armed guards and forced to work in industrial-scale online scam operations, using elaborate scripts – and posing as romantic flames or investors – to trick people in wealthy countries to send money back to their captors via trusted cryptocurrency platforms like Binance or Coinbase.
“The scams are often sophisticated; fake websites are built to showcase fraudulent data in order to convince the target that there are significant profits to be made,” the report says. “People who are targeted can also receive small amounts of money to convince them of the legitimacy of the platform. The scam is usually a long process in which targets are approached for weeks or months to build trusted relationships.”
A victim of a Chinese scamming gang shows a scar on his leg after being tortured, Phnom Penh, Cambodia, Sept. 27, 2022. (AFP)
The carefully prepared scripts are used to target people on popular services including Facebook, Grindr, Hinge, Instagram, Line, LinkedIn, Meet Me, Muslima, OkCupid, TikTok, Tinder, WeChat and WhatsApp, among other online-dating and social-networking platforms.
Victims who don’t comply, or don’t meet revenue targets, are tortured, it says. Many are told they are working off a debt incurred to transport them to the country in the first place. The debt increases when they are “sold” to new captors, and their families often extorted to free them.
Cambodia and Myanmar
Online-scam slave compounds are believed to have generated at least $7.8 billion in revenue globally in 2021, the U.N. says, with “billions” of that arriving in Southeast Asia, thanks to the region’s many casinos and “special economic zones,” where law enforcement can be lax.
Exact figures about such trafficking are “difficult to estimate because of its clandestine nature and gaps in the official response,” it notes. But “credible estimates” indicate at least 120,000 people have been held in scam compounds in Myanmar and 100,000 more in Cambodia, where the problem is centered on the coastal casino town of Sihanoukville.
A combination of weak government institutions, rampant corruption and visa-free travel across the region have all conspired to make the region vulnerable to scam slavery, the U.N. report says, with traffickers also becoming adept at seamlessly shifting operations across borders.
“States may not have the necessary capacity in, or experience with, the types of investigative techniques required for the investigation and prosecution of allegations of human rights abuses in the context of organised crime and cross-border operations,” the report says.
At best, many officials may not be trained to recognize when foreigners are being trafficked into the country, and many victims furthermore have rights to visa-free entry into the countries, either under each country’s own immigration laws or under the ASEAN visa-free travel program, which waives visa requirements for citizens of the bloc.
But the report also notes the role that corruption plays, and the widespread pattern of officials either turning a blind-eye to – or even actively protecting – the scam compounds for a cut of proceeds.
That has made Myanmar, torn apart by conflict since the February 2021 military coup d’etat, particularly impacted by such trafficking.
“The military coup, ongoing violence and armed conflicts in Myanmar, and the resultant breakdown in the rule of law, have provided fertile ground for an exponential rise in criminal activity,” the report says.
“Following the coup, transnational organised criminal actors were able to widen their existing activities within the country by working with factions within the armed forces and various militia groups,” it says.
“Many of the scam centres in Myanmar are located in weakly regulated – and often porous – border areas which are characterised by a lack of formal law enforcement structures, oversight and accountability.”
Fixing the problem
The emergence of scam compounds since the COVID-19 pandemic has become an increasing focus of world governments, given the transnational nature of its impacts, with victims on both ends of the scam coming from an increasing array of countries worldwide.
U.S. Secretary of State Antony Blinken in June awarded Cambodian journalist Mech Dara with a Hero Award for his groundbreaking work uncovering scam compounds in Sihanoukville and Phnom Penh.
U.S. Secretary of State Antony Blinken presents Cambodian journalist Mech Dara with the TIP Report Hero award in Washington, D.C., June 15, 2023. (Sarah Silbiger/Reuters)
But the problem keeps popping up in new places. This week, the mother of a teenage Laotian girl trapped in a scam compound in Myanmar told Radio Free Asia that her daughter said she would be beaten with a metal bar 50 times if found using a cellphone.
To help end the problem, the U.N. report recommends that Southeast Asian governments focus on training immigration officials to better recognize trafficking of foreigners into their countries, and continuing to combat official corruption that has protected many scam compounds.
But it also says those who come forward about their time trapped in the scam compounds should not be punished for carrying out scams, or for being in the country “illegally” and for working without a labor permit.
“A human rights-based approach to trafficking in persons works to avoid re-victimisation and thus recognises that punishing a victim of trafficking for unlawful acts committed as a consequence of their being trafficked is unjust and hinders the possibility of their recovery,” it says.
Wednesday, May 01, 2024
U.S Court Jails Former Binance CEO Changpeng Zhao For Four Months
Binance founder Changpeng “CZ” Zhao was sentenced to four months in prison on Tuesday after pleading guilty to anti-money laundering violations last year.
CZ “had the personnel, resources, and wherewithal to comply with U.S. regulations,” U.S. District Judge Richard Jones said in a Seattle courtroom while delivering Zhao’s sentence. “But failed at that opportunity.”
CZ Gets Four-Month Sentence
The ex-Binance CEO apologized during the April 30 sentencing hearing and said he wanted to take responsibility for his “mistakes”. Zhao also revealed that Binance has implemented a Know Your Customer and anti-money laundering program and is cooperating with U.S. authorities.
“The court finds the defendant has accepted responsibility. “Everything I see about your history and characteristics are of a mitigating nature and a positive nature,” said Judge Richard. The judge further pushed back against prosecutors’ recommendation for a three-year prison term.
Nonetheless, Zhao’s remorse wasn’t enough, as he will serve four months in a U.S. federal prison. Specifically, the judge indicated that he was “deeply troubled” by a statement from CZ that said, “It was better to ask for forgiveness than permission.”
Zhao launched Binance in 2017, and under his leadership, the firm grew into the world’s largest crypto exchange by trading volume. But in November, Zhao pleaded guilty to one count of violating the Bank Secrecy Act and agreed to pay a $50 million fine, while Binance was slapped with a $4.3 billion fine — one of the largest corporate settlements in American history. Additionally, Zhao was forced to step down from Binance as part of the plea agreement and was replaced by Richard Teng.
Since flying from his home in UAE to Seattle to enter that plea, CZ has been restricted from leaving the U.S. as travel limitations were imposed on him by Judge Jones, despite being free on a $175 million bond. This was after prosecutors warned that the Binance founder was a flight risk.
In March, Zhao launched Giggle Academy — an educational project devoted to crypto and blockchain for young people.
Meanwhile, Binance remains mired in a lawsuit with the U.S. Securities and Exchange Commission. The top Wall Street watchdog sued Binance Holdings in June 2023 for operating as an unregistered exchange and for failing to restrict American investors from accessing Binance.com.
Wednesday, April 24, 2024
CRYPTO CRIMINAL CAPITALI$M
DOJ recommends 36-month prison sentence for former Binance CEO Changpeng Zhao
The Department of Justice is seeking a 36-month prison sentence and a $50 million fine for former Binance CEO Changpeng Zhao. File Photo by Miguel A. Lopes/EPA-EFE
April 24 (UPI) -- Federal prosecutors Tuesday recommended 36 months in prison and a $50 million fine for former Binance CEO Changpeng Zhao after he pleaded guilty to violating money laundering laws under the Bank Secrecy Act.
In the sentencing memo filed Tuesday, prosecutors said Zhao who founded Binance in 2017 was "operating on a Wild West model that, as one compliance employee said, told criminals 'come to Binance we got cake for you,'" as the platform rapidly grew to become the world's largest cryptocurrency exchange within a year.
The sentencing recommendation exceeds the federal guidelines range of 10-16 months. His sentencing is expected April 30.
Prosecutors said billions in illegal profits were made as Zhao "reaped vast rewards for his violation of U.S. law, and the price of that violation must be significant to effectively punish Zhao for his criminal acts and to deter others who are tempted to build fortunes and business empires by breaking U.S. law."
While prosecutors said the $50 million fine is a small fraction of Zhao's wealth, it's "a historically large fine for an individual U.S. defendant."
Binance pleaded guilty to conspiracy to violate the BSA, violating the International Emergency Economic Powers Act and failure to register as a money-transferring business.
Under a plea agreement, the crypto exchange agreed to pay $4.3 billion in penalties, the most ever paid by a money services business, according to the Justice Department.
"These exceptional financial penalties-which directly resulted from Zhao's conduct demonstrate the nature and seriousness of Zhao's offense," the sentencing memo said. "Those penalties are tied directly to the profits Binance earned and the vast transactions it processed, reflecting the extraordinary scope of the scheme."
The sentencing memo said Zhao violated U.S. law on "an unprecedented scale" as he led the massive financial institution, processing trillions of dollars in cryptocurrency trades per year.
The Justice Department said Binance also harmed U.S. national security by violating sanctions against Iran while "illicit actors flocked to the exchange."
The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission have separately sued Binance for the alleged mishandling of customer assets while operating an illegal, unregistered exchange in the United States.
Zhao quit as Binance CEO in November after agreeing to the plea deal with the Department of Justice.
On Tuesday Philippines market regulators ordered Apple and Google to remove the Binance app from their stores for securities violations and to prevent "the further proliferation of its illegal activities" in the country.
Thursday, March 28, 2024
CRYPTO CRIMINAL CAPITALI$M
Sam Bankman-Fried, the fallen wunderkind of cryptocurrency
By AFP March 28, 2024 Samuel Bankman-Fried, founder and former CEO of FTX, faces a potential de facto life sentence after being found guilty of a massive fraud scheme
- Copyright AFP SAUL LOEB Thomas URBAIN
He was the face of cryptocurrency, and a young one at that — a media darling seemingly destined to unite the sector.
But the stunning rise of Sam Bankman-Fried and his FTX platform would be matched by an equally spectacular fall when it was revealed that billions of dollars of clients’ funds had been moved and spent without their consent.
After a jury in 2023 found him guilty of seven counts, a federal judge in New York sentenced Bankman-Fried on Thursday to 25 years for leading the fraudulent scheme.
Before it all came crashing down, the native Californian had amassed a fortune at one point estimated to be worth $26 billion. “Save for Mark Zuckerberg, no one in history has ever gotten so rich so young,” read a headline in Forbes, which put Bankman-Fried on its cover in October 2021.
In the span of a few months, the Massachusetts Institute of Technology graduate with a degree in physics had taken the startup he co-founded in 2019 and built it up into the world’s second largest crypto exchange platform.
He quickly became more than just a young entrepreneur, fashioning himself as an ambassador of crypto and making his first appearance in Congress in December 2021, testifying before lawmakers on the then-novel form of currency.
The public would come to know a seemingly oddball whiz kid with a mop of curly dark hair who, when not suited up for appearances on Capitol Hill, wore shorts and a T-shirt. – Center of crypto world –
The son of two Stanford University professors, Bankman-Fried ventured outside the world of cryptocurrencies, making donations to US politicians and persuading celebrities like American football star Tom Brady or basketball player Stephen Curry to pitch FTX — endorsements for which they were richly rewarded.
The young man known as SBF would charm US lawmakers with his straight talk and vision of crypto’s future, including recommendations for an extensive regulatory regime — a position at odds with many in the sector.
He devised project after project, from a platform for people to make donations in cryptocurrency to Ukraine to a market for financial derivative products that stepped on the toes of Wall Street.
A vegan, Bankman-Fried said he believed in the concept of effective altruism — finding the best way to help other people, in particular by donating all or part of one’s wealth to charity rather than, say, volunteering at a soup kitchen.
When the cryptocurrency world lurched into crisis in the spring of 2022, Bankman-Fried billed himself as a savior, buying the troubled platform BlockFi, and shares in another company that was in trouble, Voyager.
“We take our duty seriously to protect the digital asset ecosystem and its customers,” he tweeted at the time, as some people were comparing him — barely 30 years old then — to the legendary investing guru Warren Buffett. – Financial high wire –
But behind his reassurances, Bankman-Fried was walking a financial high wire, as revealed later in court documents and testimony.
Without their knowledge, Bankman-Fried’s team used the money of FTX customers to cover risky operations by an affiliated trading company called Alameda Research, as well as to buy posh real estate and to make political donations.
In November 2022, the crypto news outlet CoinDesk revealed that Alameda had converted a large part of its assets into FTT, a crypto token created by FTX. The news caused that currency to plummet.
Hours later Changpeng Zhao, the head of Binance, the world’s largest crypto exchange platform, announced it was selling all the FTT tokens it held, causing it to lose 90 percent of its value in a matter of days and taking the Bankman-Fried empire with it.
His fortune having vanished overnight, Bankman-Fried was extradited from the Bahamas, where FTX had its headquarters. In December 2022 he was indicted on charges of fraud and racketeering.
After five weeks of trial, the jury quickly reached a guilty verdict on all seven counts, which carry a potential maximum sentence of 110 years behind bars.
In closing arguments, the defense said their client had acted in “good faith” and was overtaken by circumstances and the financial ineptitude of close associates who testified against him to gain leniency from prosecutors.
Prosecutors portrayed the defendant as an extremely smart man consumed by greed who knew what he was doing when FTX funds were secretly funneled to his personal hedge fund.
According to prosecutors, at the time of the bankruptcy of FTX, just over $8 billion belonging to customers had vanished into bad investments at Alameda.
“Who had control? That’s the question. It was one person: the defendant,” the lead prosecutor concluded.
Tuesday, March 26, 2024
CRIMINAL CRYPTO CAPITALI$M
US SEC seeks $2 billion from Ripple Labs, chief legal officer says
Updated Mon, March 25, 2024 FILE PHOTO: The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021. REUTERS/Andrew Kelly/
By Jody Godoy
(Reuters) -The U.S. Securities and Exchange Commission is seeking fines and penalties totaling $2 billion in its case against Ripple Labs over sales of the cryptocurrency XRP, the company's chief legal officer said in a social media post on Monday.
In posts on X, Ripple Chief Legal Officer Stuart Alderoty said the regulator has asked U.S. District Judge Analisa Torres in Manhattan for the penalties in court papers filed under seal. The SEC was scheduled to file the documents publicly with redactions on Tuesday.
"Rather than faithfully apply the law, the SEC remains bent on wanting to punish and intimidate Ripple - and the industry at large," Alderoty said.
A spokesperson for the SEC declined to comment.
Torres ruled in July that the blockchain company's sale of XRP worth $728.9 million to hedge funds and other sophisticated buyers amounted to unlawful sales of unregistered securities.
Ripple is scheduled to file a reply in April.
The SEC sued Ripple, its CEO Brad Garlinghouse and co-founder Chris Larsen in 2020, accusing them of illegally raising more than $1.3 billion in an unregistered securities offering by selling XRP.
The SEC dropped its remaining claims against Garlinghouse and Larsen in October.
The case has been highly watched, as it is among the biggest brought by the SEC in the cryptocurrency space.
While the SEC partly won the case, Torres dealt the regulator a high-profile setback when she ruled that XRP Ripple sold on public cryptocurrency exchanges did not meet the legal definition of a security.
Torres denied the SEC's request to repeal that ruling while the case is in progress. But the regulator may appeal once the judge decides its request for penalties.
Other crypto companies facing SEC lawsuits, including major exchanges Coinbase and Binance, have pointed to Torres' ruling in urging other judges to dismiss the regulator's claims.
While the SEC has depicted most cryptocurrencies as the same kind of investment that has been classified as securities for decades, the industry has argued securities laws do not fit digital assets and called for new laws and regulations.
(Reporting by Jody Godoy; Editing by Paul Simao and Marguerita Choy)
US charges KuCoin crypto exchange with anti-money laundering failures Reuters Tue, March 26, 2024
(Reuters) -Federal prosecutors in Manhattan on Tuesday charged KuCoin, one of the world's largest cryptocurrency exchanges, with violating U.S. anti-money laundering laws by failing to vet customers, allowing billions of dollars in illicit funds to be transferred since its founding in 2017.
Prosecutors said the Seychelles-based exchange sought business from U.S. customers without registering with the Treasury Department and putting in place procedures to verify clients' identities as required by U.S. law.
KuCoin posted on social media site X that customer assets are safe and its lawyers are looking into the allegations.
"KuCoin respect the laws and regulations of various countries and strictly adheres to compliance standards," it said.
Prosecutors also charged the exchange's founders, Chinese nationals Chun Gan, 34, and Ke Tang, 39, with conspiracy. They remain at large, according to prosecutors.
The U.S. Commodity Futures Trading Commission separately filed a civil lawsuit against KuCoin alleging it failed to register its futures and swaps activities with the regulator.
KuCoin in December agreed to block New York users from its platform and pay $22 million to settle the state's lawsuit accusing it of failing to register there.
KuCoin trails Binance, Coinbase and Kraken among cryptocurrency spot exchanges on factors including traffic, liquidity and trading volumes, according to the data company CoinMarketCap.
(Reporting by Jody Godoy in New York; Editing by Andrea Ricci and Costas Pitas)
Sunday, February 25, 2024
CRIMINAL CAPITALI$M Judge approves Binance $4.3 billion guilty plea as US seeks to modify founder Zhao's bond
(Reuters) - A U.S. judge on Friday accepted Binance's guilty plea and more than $4.3 billion penalty for violating federal anti-money laundering and sanctions laws through lapses in internal controls at the world's largest cryptocurrency exchange.
U.S. District Judge Richard Jones in Seattle approved the plea, which includes a $1.81 billion criminal fine and $2.51 billion of forfeiture, about an hour after the government proposed changes to Binance founder Changpeng Zhao's bond, drawing an objection from Zhao's lawyers.
Binance's plea announced in November resolved a years-long probe that found the exchange had failed to report more than 100,000 suspicious transactions involving designated terrorist groups including Hamas, al Qaeda and the Islamic State of Iraq and Syria, or ISIS.
Prosecutors said Binance's platform also supported the sale of child sexual abuse materials and was among the largest recipients of ransomware proceeds.
In a statement on Friday, Binance said it accepted responsibility, has upgraded its anti-money laundering and "know-your-customer" protocols, and has made "significant progress" toward changes required under its plea agreement.
Zhao has been free in the United States on a $175 million bond after also pleading guilty in November to money laundering violations.
His plea included a $50 million fine and required that he step down as Binance chief executive.
In a court filing, prosecutors said the proposed bond changes were meant to reflect Jones' orders that Zhao stay in the continental United States and under court officer supervision until his April 30 sentencing.
The conditions include that Zhao provide three days notice of any travel plans, surrender his passports and maintain his current residence unless he gets approval for a change.
Pretrial services officers are recommending that Zhao also be subjected to location monitoring.
Prosecutors said they have discussed the changes with Zhao's lawyers several times, but that they "object to this motion as written."
Zhao's lawyers did not immediately respond to requests for comment.
The cases are U.S. v Binance Holdings Ltd, U.S. District Court, Western District of Washington, No. 23-cr-00178, and U.S. v. Zhao in the same court, No. 23-cr-00179.
(Reporting by Jonathan Stempel in New York; Editing by Will Dunham)
First-of-its-kind research on cryptocurrency finds that the most regulated coins create the most efficient markets.
That crypto regulation, often provided by cryptocurrency exchanges like Binance, can also help protect investors by providing reliable, public information.
“Both small and institutional investors should know, if they invest in coins without any regulation, they may suffer from price manipulation or a severe lack of insider information,” said Liangfei Qiu, a University of Florida professor of business and one of the authors of the new study.
“Instead, they may want to invest in coins listed with platforms that provide some vetted information, which serves as a kind of minimal regulation that protects investors and makes markets more efficient,” he said.
The study is the first to look at how regulation affects the efficiency of cryptocurrency markets. Researchers analyzed a suite of cryptocurrency offerings – from essentially unregulated ICOs, or initial coin offerings, to exchanges setting and enforcing their own rules – and compared the digital currencies to traditional stock exchanges, which are highly regulated by government.
Unregulated ICOs were the least efficient. But initial exchange offerings, another crypto offering known as IEOs, were nearly as efficient as traditional stock initial public offerings, or IPOs. In IEOs, the exchanges set minimum standards and rules and commit to providing investors with trustworthy information about the value of the cryptocurrency.
The exchange-based regulation is entirely voluntary, but could provide guidance to lawmakers who are increasingly interested in providing some crypto regulation to the still-emerging markets.
“If policymakers want to make sure that the market runs well, they need to provide some structure to promote regulation,” Qiu said.
To assess the efficiency of the stocks and cryptocurrencies, Qiu’s team analyzed their variance ratios, a measure of how predictable the future price of an asset is. Economists have long held that future prices of assets are essentially unpredictable – so long as everyone has the same information about the underlying value of those assets. Market inefficiencies, such as insider knowledge, can start to distort the prices, usually at the expense of investors who are out of the loop.
Qiu collaborated with fellow UF Warrington College of Business professors Mahendrarajah Nimalendran and Praveen Pathak and his former doctoral student Mariia Petryk, now a professor of business at George Mason University. Their study is forthcoming in the Journal of Financial and Quantitative Analysis.
JOURNAL
Journal of Financial and Quantitative Analysis
METHOD OF RESEARCH
Data/statistical analysis
SUBJECT OF RESEARCH
Not applicable
ARTICLE TITLE
Informational Efficiency of Cryptocurrency Markets
Monday, January 29, 2024
Sextortion training materials found on TikTok, Instagram and YouTube, according to new report
Lora Kolodny, CNBC and Kevin Collier and Ben Goggin Updated Sat, January 27, 2024
A form of cybercrime called “financial sextortion” is rapidly rising in North America and Australia, with a major portion driven by a non-organized cybercriminal group in West Africa who call themselves “Yahoo Boys,” according to a new study from the Network Contagion Research Institute (NCRI).
Sextortion is “a crime that involves adults coercing kids and teens into sending explicit images online,” according to the FBI. The criminals threaten their victims with wide distribution of the explicit images, including to the victims’ friends and family, unless the victims pay them, repeatedly, through a variety of peer-to-peer payment apps, cryptocurrency transfers and gift cards.
NCRI, a nonprofit, found cybercriminals used the social apps Instagram, Snapchat and Wizz to find and connect with their marks.
Yahoo Boys’ tactics gained popularity among some as a way to get rich quickly in West Africa, where there are scant other means of earning income, according to a 2023 Atavist investigation. Popular songs referencing Yahoo Boys have lent the cybercriminal gangs cultural clout.
Despite increasing amounts of reported sextortion online over the last several years, the NCRI researchers say that platforms used by Yahoo Boys and other threat actors have been slow to moderate their materials or make changes that could help curb the spread of sextortion.
Sextortion is a “transnational crime threat that is actually causing a significant number of American deaths,” said Paul Raffile, a senior intelligence analyst with the NCRI who co-led the study. This form of crime — which has mostly impacted boys and young men, according to NCRI Director of Intelligence Alex Goldenberg — can be so devastating that it drives some victims to suicide.
In August 2023, NBC News reported that two Nigerian men were extradited to the U.S. to face charges in a sextortion scheme that authorities say prompted the suicide of a 17-year-old Michigan high school student. The men pleaded not guilty and were denied bail in September.
And in November, according to court filings obtained by CNBC and NBC News, a grand jury indicted a Nigerian man in response to allegations from the U.S. Secret Service that he engaged in Yahoo Boys tactics, including sextortion and wire fraud of $2.5 million
In this case, the indictment reads, the accused Nigerian man and unidentified co-conspirators used fake accounts on Facebook and Snapchat to pose as attractive young women, connect to young male users and gain access to their friends and follower lists, and then entice the victims into sending them explicit photos.
The accused party allegedly promised his marks, who Yahoo Boys often refer to as “clients,” that they would delete or at least refrain from distributing the photos if they would send money through apps like Venmo, CashApp and Zelle, cryptocurrency transfers through Bitcoin with a Binance account, or gift cards.
As soon as they paid, however, the victims would face new threats and pressure to keep making payments, the filings said.
NCRI’s study found that the Yahoo Boys promote their tactics and recruit new gang members, in part, by publishing training videos and guides for running a financial sextortion scam on platforms including TikTok, Scribd and YouTube.
The NCRI researchers said they found dozens of videos on TikTok and YouTube that showed self-described Yahoo Boys engaging in sextortion by using easily searchable phrases like “blackmail format” or hashtags like #YahooBoys. They also found scripts on Scribd teaching others how to extort their victims using similar search terms. The materials on the various sites had been viewed over half a million times, according to the NCRI analysis.
NBC News and CNBC reviewed some of these materials still up on all three platforms. One video posted to YouTube instructed viewers on how to “catch a client,” keep them engaged by acting “like a real girl,” and how to convince them to send increasingly explicit photos. The video contained a walk-through on how to threaten a victim and coerce them into sending payments, at which point the narrator admitted this activity would be “high risk.”
A document posted to Scribd contained a script with seductive and explicit enticements leading to escalating threats. The document said, for example, “You ready to comply with me? I will make you so miserable that you can’t even think … I will send your nude to lots of people online … Do you want this to happen – yes or no. If you do not want it to happen you will have to pay me.” And later, “How much you got there[?] If you are thinking of 200$ forget it I’m posting your nude and gonna make you die in pain.”
After NBC News asked TikTok about several Yahoo Boys videos, the company removed them. A spokesperson said in an email that they had violated the platform’s guidelines against scams.
Scribd did not reply to a request for comment.
NBC News flagged a Yahoo Boys instructional video on YouTube to the company, but it did not remove the video nor provide a statement by the time this story was published.
The NCRI researchers also found detailed scripts that had been available for years, still readily available on sites like Meta’s Instagram and Snapchat.
TikTok, YouTube, Scribd and Meta prohibit content that promotes criminal activity.
A Meta spokesperson said in an email that the company has strict rules against sharing intimate images and that it already implements versions of many of NCRI’s recommendations, “including offering a dedicated reporting option so people can report threats to share private images.”
A Snapchat spokesperson said in an email, “We know that sextortion is a growing risk teens face across a range of platforms and have been ramping up our tools to combat it. We have extra safeguards for teens to protect against unwanted contact, and don’t offer public friend lists, which we know can be used to extort people. We also want to help young people learn the signs of this type of crime, and recently launched in-app education to raise awareness of how to spot and report it.”
While the Yahoo Boys and other threat actors have been operating for years on mainstream social media platforms, the parent companies of those platforms have been slow to substantially stem the activity.
NCRI’s director of intelligence, Alex Goldenberg, said that in-app education is a great start, but tech companies can do more to stop sextortion online.
Platforms like TikTok, YouTube and Scribd should actively search for and take down the sextortion how-to guides, materials and scripts that they are hosting, he said. And social media platforms should include a distinct category to report sextortion — as Snapchat did in early 2023.
Goldenberg emphasized that social apps should make it more difficult to access information about a specific users’ network. On public accounts on Instagram, for example, followers and following lists are visible to all, which enables cybercriminals to infiltrate a victim’s personal network and exert leverage over them by threatening to send photos to people they know.
Even in a private account on Instagram, the moment a user accepts a scammer’s follow request, that scammer can view and try to connect with all of their friends and followers. A design change to make or keep users’ followers and following lists private would take an important source of criminals’ leverage away.
A Meta spokesperson said that for users under 16, Meta defaults their accounts to private so that it's only possible to see their network if they accept your follow request.
On Snapchat, users should be made aware that photos can be saved and screenshotted, Goldenberg said. Parents and educators should “combat the belief that photos sent on Snapchat disappear, which can create a false sense of security,” the NCRI study recommends.
A former Snapchat employee, who asked to remain unnamed (but whose identity is known to CNBC and NBC News) corroborated some conclusions from the NCRI study as they pertained to company. The former employee said that rising financial sextortion had been discussed at the company starting as early as 2021 and that it intensified in the years that followed. The former employee agreed that Snapchat and other social media companies have not acted strongly or swiftly enough to protect young users.
The NCRI study also strongly criticized Wizz, concluding: “Sextortion on Wizz is pervasive and dangerous. The app’s design, seemingly akin to a Tinder-like interface for minors, has fostered an environment ripe for the rampant spread of sextortion.”
In July, child safety groups told NBC News that they were receiving an alarming number of reports about the alleged sextortion of young people originating on Wizz.
In response, Wizz said that it attempts to prevent such behavior through automatic moderation systems, which it says don’t allow the transmission of nude images. According to child safety groups, complaints made about Wizz often state that initial connections are made on the app before moving the alleged victim to another app like Snapchat.
Apple’s App Store and Google Play can also help, the NCRI study suggested, by carefully monitoring complaints about sextortion associated with social media apps, and enforcing their existing policies.
NCRI’s study comes amid heightened scrutiny of how social media is impacting young people.
New Mexico Attorney General Raúl Torrez sued Meta and CEO Mark Zuckerberg, accusing the company of enabling human trafficking and the distribution of child sexual abuse materials, and alleging that Facebook and Instagram are “breeding grounds” for predators targeting children in a formal complaint.
As NBC News previously reported, Meta responded to that lawsuit by saying it has been proactive in finding and removing accounts and content that violate its child safety policies.
CEOs from Meta, X (formerly Twitter), TikTok, Snapchat and Discord are expected to answer questions from a bipartisan Senate Judiciary Committee regarding their efforts to stop sextortion at a hearing about child safety online that is scheduled for Jan. 31.
In the U.S., people who have experienced sextortion (or their parents or guardians) can report it via the FBI’s cybercrime portal IC3.gov online, or a local FBI field office. Sextortion incidents involving a minor should also be reported to the National Center for Missing & Exploited Children or NCMEC Cypertipline at report.cybertip.org or by phone at 800–843–5678.
This article was originally published on NBCNews.com
Wednesday, January 03, 2024
Here are Canada's highest-paid CEOs
Ben Cousins, BNN Bloomberg
Canada’s highest-paid CEOs come from a variety of industries, including telecommunications, fast food, auto parts and technology.
Canada's 100 highest-paid CEOs broke new compensation records in 2022: report
Rosa Saba, The Canadian Press
Canada’s 100 highest-paid CEOs broke records with their compensation in 2022, according to the Canadian Centre for Policy Alternatives.
“The data this year is breaking new all-time highs,” said senior economist David Macdonald.
The organization’s annual report found that the CEOs, most of them men, were paid an average of $14.9 million, up from an average of $14.3 million in 2021.
That’s $7,162 an hour, 246 times more than what the average Canadian worker makes. Before the second day of the new year is over, the average CEO has already made the average worker’s yearly salary, the report said.
That gap widened in 2022, as the average worker saw their pay rise three per cent while CEOs’ pay rose on average by 4.4 per cent. Meanwhile, prices rose by 6.8 per cent that year, the report said.
“This is very much related to what's happening to corporate profits in 2022, similar to what happened in 2021,” said Macdonald. “It is a similar story of inflation driving profits, profits driving bonuses, and CEOs reaping the rewards.”
CCPA has been tracking CEO pay for about a decade and a half, said MacDonald. In the early days of the report, CEOs were making closer to 150 times what the average made, he said.
Most CEO pay comes not in the form of salary but in bonuses, company shares and stock options, said Macdonald — in fact, some CEOs don’t have a salary at all.
Halfway through 2021, the stock-option tax deduction was capped at $200,000, noted Macdonald. Perhaps as a result, awarding shares has become a bigger part of CEO compensation recently, he said.
The report looks at the pay of current and former Canadian CEOs in 2022 as well as executive chairs, a position that outranks CEO.
Topping the list was executive chairman J. Patrick Doyle of Restaurant Brands International Inc., the CCPA report said.
Doyle, whose company owns Tim Hortons, Burger King and Popeyes, made $151.8 million in 2022, the report said. His pay came exclusively in the form of share-based and option-based awards.
Coming in second was CEO Matthew Proud of Dye & Durham Ltd., who brought in $98.9 million solely through option-based awards.
CEO Seetarama (Swamy) Kotagiri of Magna International Inc. was a distant third, making $36.4 million through a combination of his salary, share-based and option-based awards, and non-equity incentive plan compensation.
The list includes leaders from a variety of sectors including financial, technology, energy, telecom and health.
Only four of the top earners are women — the same number as people named "Mark" and "Scott," the report said.
“This is a boys’ club,” said Macdonald.
The gap between average CEO pay and average worker pay is highest in Ontario, which holds almost half the people on the top-100 list, Macdonald said. The highest-paid CEOs in Ontario make 298 times the average Ontario worker, at $18.5 million.
The report recommends making new top income tax brackets, removing the corporate deductibility of pay packages over $1 million, introducing a wealth tax and increasing the capital gains inclusion rate.
Even though executive compensation is supposed to be tied to company performance, the weakening economy in 2023 doesn’t necessarily mean CEO pay will have weakened in step, said Macdonald. Profits have been lower in 2023, but companies have historically found other reasons to compensate CEOs, he said.
“It’s tails, I win, heads, I also win.”
This report by The Canadian Press was first published Jan. 2, 2024.
Record-breaking CEO pay should spark tax discussion: researcher
BNN Bloomberg
An economics researcher says record-breaking CEO compensation figures should spark a conversation about tax policies affecting Canada’s highest corporate earners.
Canada’s highest-earning executives were paid 246 times more than the average worker in 2022, according to a new report from the Canadian Centre for Policy Alternatives (CCPA).
The top 100 CEOs took home average salaries of $14.9 million in 2022, setting a new record.
David Macdonald, senior economist with the CCPA and author of the report, told BNN Bloomberg many of the highest-earning CEOs fill most of their salaries with vast sums of share awards are meant to incentivize CEO performance.
However, Macdonald’s research showed that stocks at companies run by upper-echelon earners have largely declined over the past two years, suggesting high salaries don’t necessarily translate to better stock performance.
“Just because you’re paying your CEO top amounts, it might be good for them, but it’s not necessarily great for the shareholders,” Macdonald said in a Tuesday television interview.
TAX CONSIDERATIONS
The CCPA’s report found awarding shares to CEOs has emerged as the most popular pay option in recent years, as stock options and salaries have more tax implications.
Macdonald said he hopes the report raises alarm bells about tax incentives for the richest Canadians.
“I think a lot of Canadians are upset CEOs get paid so much and CEO work is valued so much more than the work of average workers,” Macdonald said.
“We don’t have to like it, but that doesn’t mean we don’t have to tax it and certainly we shouldn’t be giving tax subsidies to some of the richest people in the country.”
HIGH SALARIES REFLECT ‘UNIQUE TALENTS’: PROF
Ian Lee, an associate professor of management at Carleton University, made the case that CEOs are “superstars” in their fields and said their high compensation levels reflect their skills and expertise.
“There are some people with very, very unique talents, whether they’re Hollywood movie stars or musicians or football players or hockey players … or CEOs that have the very, very unique skills and they’re not substitutional,” Lee told BNNBloomberg.ca in a Tuesday phone interview.
“The vast majority of us are not Beyonce or Taylor Swift or Patrick Mahomes or Sidney Crosby.”
Musk leads world's richest to US$1.5 trillion wealth gain in 2023
Jordan Fitzgerald, Bloomberg News
It was a comeback year for the world's wealthiest.
The combined net worth of the 500 richest people surged by US$1.5 trillion in 2023, fully rebounding from the $1.4 trillion lost the year prior, according to the Bloomberg Billionaires Index.
Once again, their fortunes were closely correlated to the performance of tech stocks, which rose to fresh records this year despite recession fears, lingering inflation, lofty interest rates and geopolitical turmoil. Tech billionaires saw their wealth grow by 48 per cent or $658 billion, propelled by intense hype around artificial intelligence.
No one did better than Elon Musk, who recaptured the title of world's richest person from French luxury tycoon Bernard Arnault. The Tesla Inc. chief executive officer netted an additional $95.4 billion through Thursday's close, bolstered by the success of Tesla and SpaceX, after losing $138 billion in 2022. His net worth is now more than $50 billion above Arnault's after a global slowdown in demand for luxury goods dented shares of LVMH Moet Hennessy Louis Vuitton SE.
Amazon.com Inc. founder Jeff Bezos added more than $70 billion to his wallet this year and is now neck-and-neck with Arnault for second place, while Meta Platforms Inc. CEO Mark Zuckerberg's fortune jumped by more than $80 billion.
The rising tide left some boats behind. Indian billionaire Gautam Adani lost $21 billion on Jan. 27 alone – and $37.3 billion across the whole year – after short-seller Hindenburg Research tanked the value of the Adani Group. Nevertheless, he still possesses an 11-figure fortune.
LOOKING AHEAD
What does the world hold in store for the wealthiest people in 2024? While it's impossible to know for sure — few would have foreseen such a large rebound this year — here are some of the names to watch:
Miriam Adelson
Adelson, 78, became the majority shareholder of casino operator Las Vegas Sands Corp. after her husband Sheldon's death in 2021. After lying low for a time, Adelson this year reached a deal to buy a $3.5 billion majority stake in the Dallas Mavericks and courted Republican presidential candidate Nikki Haley. Her net worth climbed to $34.3 billion.
The founder of Point72 Asset Management is all in on New York dynasties — old and new. Cohen, 67, owns the News York Mets and is attempting to revitalize the baseball franchise after years of lackluster performance. He's also partnering with Hard Rock International in an attempt to secure one of the state's limited new casino licenses, giving beleaguered Mets fans the chance to gamble their sorrows away. His wealth rose to $13.9 billion in 2023.
Mark Cuban
Cuban, 65, has a knack for getting out at the right time, selling his radio-streaming website Broadcast.com shortly before the dot-com bubble burst. He purchased the Dallas Mavericks in 2000 for $285 million, winning three division titles, two conference championships and an NBA championship before flipping them to Adelson for $3.5 billion. (He'll keep a minority stake.) Whether this goes down as another well-timed Cuban sale remains to be seen. His fortune climbed to $6.8 billion this year.
Carl Icahn
It was a rough year for the activist investor after short-seller Hindenburg Research initiated a meltdown that wiped $18.1 billion from his fortune, including more than $10 billion in just one day. Still, 87-year-old Icahn has a lot of fight left in him. He intends to launch a new proxy battle to take control of Illumina Inc.'s board, according to people familiar with the matter, after the DNA-sequencing company terminated a costly acquisition that Icahn had criticized.
Rupert Murdoch
The 92-year-old News Corp. founder has officially retired, ceding control to his son, Lachlan. It's set to be a rocky year for the heir as candidates including Joe Biden and Donald Trump vie for the presidency again. Fox Corp. already settled with Dominion Voting Systems for $787.5 million after the company accused the network of airing false claims that it rigged the vote against Trump. Fox still faces another lawsuit by Smartmatic Corp. in a similar case. The controversy hasn't dented Rupert Murdoch's net worth, which rose to $8.9 billion in 2023.
Masayoshi Son
The Japanese investor made a big bet on WeWork, which officially crumpled in 2023, and people are questioning his judgment after he continued to pour money into Adam Neumann's remote-work business even after it was clearly struggling. The SoftBank Group Corp. founder, 66, is likely to struggle further as deals dry up. But he's pulled himself out of deeper holes before, climbing back after losing tens of billions of dollars in the dot-com crash. Son's wealth fell to $11.4 billion this year.
Donald Trump
The former president and current candidate may have lost the 2020 election, but his wallet has only gained. His wealth has grown by $500 million since 2021, giving him a total net worth of $3.1 billion, according to the Bloomberg Billionaires Index. Still, 2024 will be a battle for Trump, 77, as he defends himself in lawsuits related to his defamation of author E. Jean Carroll, alleged fraud as well as his attempts to overturn the 2020 election – all while running for president.
Changpeng “CZ” Zhao
In many ways it was a rough year for the 46-year-old founder of Binance, the world's biggest crypto exchange. In November, CZ and Binance pleaded guilty to money laundering and U.S. sanctions violations. He agreed to step down as CEO and personally pay a $50 million fine in addition to the $4.3 billion Binance will have to fork over. Still, the rebound in crypto boosted CZ's wealth by nearly $25 billion this year, even as he may be headed to jail in 2024.
